If you are a business person, according to Section 44AA of the Income-tax Act, 1961, you will be required to maintain regular books of account in particular cases. For providing relief to small taxpayers from such hassles, a provision for presumptive tax is there under Sections 44AD, 44ADA, and 44AE.
You can save yourself from the risks of fluctuating business revenue by opting for this plan. If you opt for assessment under the presumptive tax scheme, you can declare your income at a prescribed rate. So, get in touch with a Tax Expert now.
Businesses and traders whose annual turnover does not exceed Rs 2 crore are given a special relief by the Income Tax Department’s Presumptive Tax Scheme under Section 44AD. Professionals with total receipts before taxation up to Rs 50 lakhs can also prefer to have their income taxes returned under this scheme. The benefit is that you will be taxed at a fixed rate for a certain period until you can get up on your feet.
Small taxpayers such as traders, wholesalers or other businesses, professionals such as doctors, lawyers, engineers, architects, accountants, technical consultants, IT professionals, Interior Designers, Company Secretaries or artists can opt to be taxed in this manner.
The presumptive taxation method can be adopted by the following types of taxpayers:
- Resident Individuals
- Resident Hindu Undivided Families
- Resident Partnership Firms (not Limited Liability Partnership Firms)
This scheme, therefore, cannot be adopted by a non-resident. Finally, this scheme cannot be adopted by any person claiming deductions under section 10A/10AA/10B/10BA or under sections 80HH to 80RRB in the relevant year.
The following types of businesses cannot opt to be taxed under presumptive tax scheme:
- The business of plying, hiring or leasing goods carriages referred to in sections 44AE.
- A person who is carrying on any agency business.
- A person who is earning income in the nature of commission or brokerage.
- Any business whose total turnover or gross receipts exceeds Rs 2 crore.