Director of Pvt company can declare income under 44ADA?

- If the services provided by the directors to the Co. in the capacity of professional and not an employee of the Co. then the directors can avail the benefit of presumptive taxation u/s 44ADA subject to fulfillment of other conditions of section 44ADA

- If the aggregate value of professional services provided by the director exceeds Rs.20 lacs then the directors would be liable to obtain GST registration, raise invoice to the Co. and charge 18% GST on the value of services. Co. will take ITC of GST charged by the directors. If the services provided by Co. are treated as export of services then Co. can claim refund of ITC on inputs and inputs services

- Under section 44ADA, income would be computed at a sum equal to 50% or actual income earned whichever is higher

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Dear Sir,

No—you cannot use Section 44ADA of the Income Tax Act for income received as a director from your own Pvt Ltd company.

You can use 44ADA only if:

• You earn income independently as a professional (e.g., freelancing software services)
• NOT through your own company structure

Thanks & Regards,

Payal Chhajed

If you are executive director in the company its not possible

If you are non executive director in the company you can charge professional fees to company and declare it under 44ADA - Subject to make sure company will have RCM liability under GST on this

- If the payment of professional fees is Rs.50,000 or more then the Co. is liable to deduct TDS @10%