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How to calculate taxable income in case of a person adopting the presumptive taxation scheme of section 44ADA?
Formula for Taxable Income: Taxable Income=50%×Gross Receipts ✅ No deductions for expenses like rent, salaries, depreciation, etc.✅ Deductions under Chapter VI-A (like 80C, 80D, 80G) are allowed. Additional Considerations ✅ No Need to Maintain Books of Account (if 50% or more is declared).✅ AdvanceRead more
Formula for Taxable Income:
Taxable Income=50%×Gross Receipts
✅ No deductions for expenses like rent, salaries, depreciation, etc.
✅ Deductions under Chapter VI-A (like 80C, 80D, 80G) are allowed.
Additional Considerations
✅ No Need to Maintain Books of Account (if 50% or more is declared).
✅ Advance Tax to be Paid in One Installment by March 15.
✅ ITR-4 (Sugam) Must Be Filed.
🚫 If declaring income below 50%, books of account must be maintained & audit may be required.
See lessCan we claim further deduction of expenses when we have adopted section 44ADA?
No, you cannot claim additional deductions for business expenses like rent, salary, office expenses, etc., when opting for the presumptive taxation scheme under Section 44ADA. ✅ As per Section 44ADA(2), the 50% of gross receipts deemed as income already accounts for all expenses related to the profeRead more
No, you cannot claim additional deductions for business expenses like rent, salary, office expenses, etc., when opting for the presumptive taxation scheme under Section 44ADA.
✅ As per Section 44ADA(2), the 50% of gross receipts deemed as income already accounts for all expenses related to the profession.
🚫 Depreciation under Section 32 is NOT allowed separately.
✅ However, the written-down value (WDV) of assets will be considered after reducing deemed depreciation.
What Deductions Are Still Allowed?
✅ Deductions under Chapter VI-A (like 80C, 80D, 80G, etc.) CAN be claimed.
✅ Some common deductions that can be claimed separately:
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See lessSection 80C: Investments in PPF, ELSS, Life Insurance Premium, EPF, etc. (Max ₹1.5 lakh)
Section 80D: Medical insurance premium paid for self & family (up to ₹25,000/₹50,000 for senior citizens)
Section 80E: Interest on education loan
Section 80G: Donations to charitable institutions
Section 80TTA: Interest on savings bank account (up to ₹10,000)
Is advance Tax is need to be paid if we have adopted the presumptive taxation scheme of section 44ADA?
Yes, a taxpayer opting for the presumptive taxation scheme under Section 44ADA is required to pay advance tax. However, the payment schedule is different from regular taxpayers. Advance Tax Rule for Section 44ADA (Special Provision - Section 211(1)(b)) Entire advance tax (100%) must be paid in a sinRead more
Yes, a taxpayer opting for the presumptive taxation scheme under Section 44ADA is required to pay advance tax. However, the payment schedule is different from regular taxpayers.
Advance Tax Rule for Section 44ADA (Special Provision – Section 211(1)(b))
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See lessEntire advance tax (100%) must be paid in a single installment on or before March 15 of the financial year.
If advance tax is not paid by March 15, interest under Sections 234B & 234C will be levied.
If a person adopts the presumptive taxation scheme of section 44ADA, then he is required to maintain books of account as per section 44AA?
Requirement to Maintain Books of Account & Audit 📌 Case 1: If Income Declared is 50% or More✅ No requirement to maintain books of account under Section 44AA.✅ No requirement for tax audit under Section 44AB. 📌 Case 2: If Income Declared is Less Than 50%❌ Books of account must be maintained as peRead more
Requirement to Maintain Books of Account & Audit
📌 Case 1: If Income Declared is 50% or More
✅ No requirement to maintain books of account under Section 44AA.
✅ No requirement for tax audit under Section 44AB.
📌 Case 2: If Income Declared is Less Than 50%
See less❌ Books of account must be maintained as per Section 44AA.
❌ Audit under Section 44AB is required if total income exceeds the basic exemption limit (₹2.5 lakh/₹3 lakh/₹5 lakh as per age category).
What provision will apply if a person opt for the presumptive taxation scheme of section 44ADA and declares his income from profession at lower rate (i.e. less than50%)?
"If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:(a) Maintain books of account as per Section 44AA, and(b) Get his accounts audited under Section 44AB."
“If an assessee declares income lower than 50% of gross receipts, and his total income exceeds the basic exemption limit, he shall be required to:
See less(a) Maintain books of account as per Section 44AA, and
(b) Get his accounts audited under Section 44AB.”
Who is eligible for presumptive taxation scheme of section 44AE?
1. Who Can Opt for Section 44AE? As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to: ✅ Eligible Assessees: Individuals Hindu Undivided Families (HUFs) Partnership firms (excluding LLPs) Companies ✅ Eligible Business: The assessee must be engaged in the busRead more
1. Who Can Opt for Section 44AE?
As per Section 44AE(1) of the Income Tax Act, 1961, the presumptive taxation scheme applies to:
✅ Eligible Assessees:
Individuals
Hindu Undivided Families (HUFs)
Partnership firms (excluding LLPs)
Companies
✅ Eligible Business:
The assessee must be engaged in the business of plying, hiring, or leasing goods carriages.
✅ Vehicle Ownership Limit:
The taxpayer must not own more than 10 goods vehicles at any time during the previous year.
2. Who is NOT Eligible for Section 44AE?
🚫 The following categories are NOT eligible for Section 44AE:
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See lessPersons owning more than 10 goods vehicles at any time during the financial year.
Limited Liability Partnerships (LLPs) – Since Section 44AE applies only to individuals, HUFs, firms (excluding LLPs), and companies, LLPs cannot opt for this scheme.
Businesses other than plying, hiring, or leasing goods carriages.
Taxpayers who wish to declare lower income than the prescribed presumptive income – They must maintain books of account under Section 44AA and get an audit under Section 44AB, if applicable.
Can a person who owns more than 10 goods vehicles adopt the presumptive taxation scheme of section 44AE?
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.
A person who owns more than 10 goods vehicles at any time during the year CANNOT opt for Section 44AE.
See less✅ If ownership is within the 10-vehicle limit, the taxpayer can use Section 44AE.
❌ If the limit is exceeded, books of account must be maintained, and actual profit/loss must be computed.