1) Yes
2) 6% or actual profit whichever is higher
3) Better to maintain and retain them
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Presumptive taxation
I work in a IT company. My main source of income is from Salary. Info about my side business ~~~~~~~~~~~~~ I buy and sell retail subscriptions of online services - like streaming services ( Netflix, Amazon Prime etc) or VPN services. For example, I buy 1 Subscription of VPN from a VPN company at, lets say, INR 1000 as a retail customer. Then I sell it to 4 students at 250 INR each, so total I get is 1200 INR, of which 200 INR is my profit. So 17% Profit, but real profit might be much less if I include lot of other business-related expenses. My total turnover expected this FY 2025-26 is around 6-10 lakhs. All my transactions are online / digital. Doubts I have: ~~~~~~~~~~~~~ I heard about Presumptive tax 44ad, where we can only pay tax once. 1) Is this applicable for me ? 2) How much tax will i have to pay ? Is it tax on 6% of gross receipt ? or do we have to manually calculate all sales and expenses to find actual profit and pay tax on that ? 3) Do I need to maintain all invoices, expenses , bank statements ?
Asked 9 hours ago in Income Tax
Presumptive taxation under Section 44AD is designed for small taxpayers like you with a turnover up to ₹2 crore in a financial year, making it simpler to pay tax without maintaining detailed accounts.
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Applicability: Yes, your side business of buying and selling online subscriptions with expected turnover between ₹6-10 lakhs qualifies for presumptive taxation under Section 44AD for FY 2025-26.
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Tax Calculation: Under Section 44AD, the Income Tax Department presumes your profit at 6% of your gross receipts if you receive payments digitally (which you do). You pay tax on the higher of this presumptive income or your actual net profit (if you opt to maintain books and prove higher profit). So, you do not have to manually calculate all sales and expenses unless you choose to maintain detailed accounts and claim actual profits.
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Record Keeping: Although presumptive taxation reduces compliance, it is advisable to maintain and retain all invoices, expense bills, and bank statements. This helps substantiate income if required in case of any tax assessments or audits, especially since your business is digital and you have multiple transactions.
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