Can we show more than 8\% profit in 44AD?

30 January 2014 The AO has no power to reject your claim if it is 8\% or more. But your increase in wealth/assets should not be more than the declared income.

Is it mandatory to show 8\% profit?

According to this section the profits and gains from eligible businesses carried by an eligible assessee are required to be computed at least at the rate of 8\% / 6\% of the total turnover / gross receipts.

What is the limit for presumptive taxation?

A professional having a gross revenue upto Rs 50 lakhs can opt for the presumptive scheme of tax wherein he can straightaway offer 50\% of the gross revenue as his taxable income and pay taxes as per his slab rates on such income.

What is the turnover limit for 44AD?

Rs 2 crore
What is turnover under section 44AD? Individuals , HUFs or partnership firms to be eligible for opting for presumptive income u/s 44AD should not have turnover more than Rs 2 crore.

How is profit calculated under section 44AD?

In case of a person adopting the provisions of section 44ADA, income will be computed on a presumptive basis, i.e. @ 50\% of the total gross receipts of the profession. In other words, total gross receipts from profession should not exceed Rs 50 lakh for a financial year.

Can we show commission income in 44AD?

A person who is earning income in the nature of commission or brokerage cannot adopt the presumptive taxation scheme of section 44AD. Insurance agents earn income by way of commission and, hence, they cannot adopt the presumptive taxation scheme of section 44AD.

What is presumptive basis?

Presumptive taxation scheme (PTS) allows you to calculate your tax on an estimated income or profit. Under PTS, the eligible businesses can estimate their net income at the rate of 6\% of the total turnover, if gross receipts are received through digital mode of payments or at the rate of 8\% in case of cash receipts.

What is the amount of Presumptive Income under Section 44AD?

As per the provisions under Section 44AD, computed presumptive income (6\% or 8\% of gross receipts or turnover of the eligible business for the previous year) is considered as the net income for the business covered under the presumptive taxation scheme.

Can we use Section 44AD and show 8\% of profit?

The 5 years limit is for 44ADA as well. Q – Can we use section 44AD and show 8\% even if profit is 20\%? Ans: Section 44AD is applicable to small business to provide them ease of compliance and save them from requirement of maintenance of detailed books and getting them audited annually.

Can I claim tax deductions under Chapter VI-a under Section 44AD?

An assessee can claim tax deductions and avail benefits under Chapter VI-A (Section 80C to 80U) even if he is declaring income as per presumptive taxation scheme under Section 44AD of the Income Tax Act. Section 44ADA Section 44ADA extends the benefit of presumptive taxation to professionals, which was only available to specific businesses before.

Can a private limited company opt for presumptive taxation under Section 44A?

Now, even if the company satisfies all the above mentioned conditions, it cannot opt for presumptive taxation scheme under Section 44A as private limited companies are not eligible under the provisions of the scheme.