• Section 44AD vs 44ADA

Hi. I am a freelance web designer and cater exclusively to overseas clients and receive weekly payments in my bank account through an online portal, Upwork. I have submitted my tax return under section 44ada for professionals.

1. Does my income qualify for section 44ad as sole proprietor?
2. Will I need to register the company in any form to file under 44ad as sole proprietor?
3. Will I have to modify my previous tax return?

Any advice would be much appreciated. Thanks!
Asked 5 years ago in Income Tax

44ADA is only for professional who are covered in definition of professional u/s 44AA,

Professional as per above section , a person carrying on any of the following

Legal

Medical

Engineering

Architectural

Accountancy

Technical Consultancy

Interior Decoration

Any other profession that may be notified by CBDT in future

Lalit Bansal
CA, Delhi
756 Answers
58 Consultations

5.0 on 5.0

Hi,

1. If you are a professional, your income does not qualify for 44AD. It may qualify for section 44ADA depending upon your nature of profession.

2. No

3. It depends upon the nature if your profession.

Please feel free to call/ revert in case you need more clarity.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

You can take benefit of 44ADA, NOT 44AD. Your 50% of income will be considred as taxable income.

Vidya Jain
CA, Kolkata
974 Answers
57 Consultations

4.8 on 5.0

You can opt for presumptive taxation under 44ADA.

44AD is for businesses and not for professionals.

Lakshita Bhandari
CA, Mumbai
5639 Answers
773 Consultations

5.0 on 5.0

Not an issue till your gross receipts crosses 2 crores

Vidya Jain
CA, Kolkata
974 Answers
57 Consultations

4.8 on 5.0

In such case also, you can avail benefit of presumptive taxation scheme under section 44ADA.

Lakshita Bhandari
CA, Mumbai
5639 Answers
773 Consultations

5.0 on 5.0

Hello,

You will still be able to file your IT returns under 44ADA even if you open an office and hire employees and continue with the same work.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

Sorry but you can't claim 44AD. You may get benefit of presumptive taxation under section 44ADA.

Please feel free to call/ revert in case you need more clarity.

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hi,

Technical consultancy is a wide term and you can call your design and development of websites as technical services and claim the benefit of section 44ADA. As per Income-tax Act, 1961 there is no need for you to register your sole proprietorship.

Even if you do operate out of an office and employ personnel, you can continue to claim the presumptive taxation under section 44ADA.

Trust this clarifies.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B

Keerthiga Padmanabhan
CA, Greater Mumbai
784 Answers
27 Consultations

5.0 on 5.0

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