September 19, 2019

Sec 44ADA on Professional Income

 Why Sec 44ADA Came?

This scheme is  to give relief to small taxpayers engaged in specified profession.

 Eligible Assessee

The Assessee is resident in India and carry on following  professions then, he will be eligible persons

  • Legal
  • Medical
  • Engineering or architectural
  • Profession of Accountancy
  • Technical consultancy
  • Interior decoration
  • Any other profession as notified by CBDT

Eligible Turnover:

  • Gross Receipts from the said profession of assessee should not exceed Rs.50 Lakhs, if the gross receipts exceeds Rs.50 lakhs then the presumptive scheme is not available

Amount of income under the head PGBP:

Income under the head Profit and Gains from Business and profession under presumptive scheme i.e. 50% of the total gross receipts of the profession.

If he is applying for presumptive scheme, then 

  • he cannot claim deduction under section 30 to 38
  • Deduction U/s 32 for depreciation is not available.
  • Written down value of any asset used in such business is to be be calculated, as if depreciation as per section 32 is claimed and has been actually allowed.
  • he is not required to maintain books of accounts
  • A person is also liable to pay advance tax.

Consequence if he does not opt for the presumptive taxation scheme 

A person can declare income at lower rate (i.e. less than 50%), then

  • he is required to maintain the books of account as per the provisions of section 44AA, and
  • get his accounts audited as per section 44AB, if his income exceeds the maximum amount chargeable to tax