Frequently asked questions
Who can take advantage of the Presumptive taxation scheme of section 44ADA?
44ADA can be adopted by a person Resident in India, carrying on specified Profession whose Gross receipts do not exceed fifty lakh rupees in a financial year.
Following professions are specified profession:
1. Legal
2. Medical
3. Engineering or architectural
4. Accountancy
5. Technical consultancy
6. Interior decoration
7. Any other profession as notified by CBDT
What is the manner of computation of taxable Business Income in case of a person adopting the Presumptive taxation scheme of section 44AD /44ADA/44AE?
1. 44AD : Income will be computed on Presumptive basis, i.e., @ 8% or more of the Turnover or Gross receipts of the eligible business for the year. No further expenses will be allowed or disallowed (Turnover limit : 2crores)
2. 44ADA : Income will be computed on Presumptive basis, i.e. @ 50% or more of the Total Gross receipts of the profession. No further expenses will be allowed or disallowed. (Gross receipt limit: 50 lakhs )
3. 44AE: Income will be computed on an estimated basis. Income will be computed @ Rs. 7,500 per month or part thereof during which the goods vehicle is owned by the taxpayer, in the previous year. Part of the month would be considered as full month. (Goods Vehicle limit : 10 nos.)
Can a person whose Total Turnover or Gross receipts for the year exceed Rs. 2,00,00,000 adopt the Presumptive taxation scheme of section 44AD ?
If the total Turnover or Gross receipt of the Business exceeds Rs. 2,00,00,000 then the scheme of section 44AD cannot be adopted.
Is it required to pay Advance tax for Income under Presumptive taxation scheme i.e. 44AD/44ADA/44AE?
Any person opting for the Presumptive taxation scheme under section 44AD/44ADA/44AE is liable to pay whole amount of Advance tax on or before 15th March of the Previous year. If he fails to pay the Advance tax by 15th March of Previous year, he shall be liable to pay interest as per section 234C.
If a person adopts the Presumptive taxation scheme but he opts out from the scheme in any of the subsequent five years, then what are the consequences?
1. If a person opts for Presumptive taxation scheme then he is required to follow the same scheme for next 5 years. If he failed to do so, then Presumptive taxation scheme will not be available for him for next 5 years.
2. For example, an assessee claims to be taxed on presumptive basis under Section 44AD for AY 2017-18. For AY 2018-19 and 2019-20 also he offers Income on basis of Presumptive taxation scheme. However, for AY 2020-21, he did not opt for Presumptive taxation Scheme. In this case, he will not be eligible to claim benefit of Presumptive taxation scheme for five AYs, i.e. from AY 2021-22 to 2025-26.]
Can an Insurance Agent adopt the Presumptive taxation scheme of section 44AD?
A person who is earning income in the nature of commission or brokerage cannot adopt the presumptive taxation scheme of section 44D . Insurance agents earn Income by way of commission and hence, they cannot adopt the Presumptive taxation scheme of section 44D .
Presumptive income tax filing- Rs.1769
ITR-4 is filed for persons having small businesses or profession who can not prepare proper book of accounts (like doctors, architects, consultants etc). For ease of doing business government has given a facility to file your return of income on estimate basis i.e. Presumptive Income. Under Presumptive income tax filing return can be filed by business u/s 44AD, having gross receipt or turnover less than Rs 2 crores or profession having gross receipts less than Rs 50 lakhs u/s 44ADA. Also persons engaged in business of leasing, plying or hiring of trucks having not more than 10 goods carriage can file return under Presumptive Taxation u/s 44AE. Taxgoal assists small business men, startups and professionals in maximising their tax savings and filing their returns fast and easy.
Not Required to maintain Books of Accounts for your Business? Don't know your exact income? File presumptive income return u/s 44AD/44ADA/44AE using this plan.
Who can file Income Tax return under presumptive income scheme?- Resident Individual
- Resident Hindu Undivided Family
- Resident Partnership Firm (not Limited Liability Partnership Firm)
- In other words, the scheme cannot be adopted by a Non-resident and by any person other than an Individual, a HUF or a Partnership firm (not Limited Liability Partnership Firm)
- Further, this Scheme cannot be adopted by a person who has made any claim towards deductions u/s 10A/10AA/10B/10BA or u/s 80HH to 80RRB in the relevant year.
- Assistance on Income tax Queries like issues relating to deduction, tax saving etc.
- Filing of Income Tax return
- Assist in payment of challan for discharging tax liability
- Review of Computation of tax and file return once approved by you
- Any Individual, HUF or Partnership Firm (not LLP) whose Turnover or Gross receipts from Business does not exceeds 2 crores (Sec 44AD) and wishes to declare profit 8% or above of Gross receipts or Turnover
- The Presumptive taxation scheme of section 44AE can be adopted by a person who is engaged in the Business of plying, hiring or leasing of goods carriages and who does not own more than 10 goods vehicles at any time during the year. (Sec 44AE)
- Professionals & Freelancers having Annual Gross receipts under Rs. 50 lakh and declaring income at 50% or above(no audit) (Sec 44ADA) and wishes to declare Profit from Profession 50% or above of Gross receipts.
- Details such as PAN card no, AADHAAR CARD
- Bank details such as Account no., IFSC code
- Bank Account statement
- Proofs of Investments such as LIC premium paid, fees of children etc
- Details of any Advance Tax deposited
- Gross receipts during the year along detail of other incomes and expenses
- Any other detail as required
| Plan Charges | 1499 |
| Goods & Services Tax (GST) | 270 |
| Total Cost | 1769 |
* Estimate Time for Service Completion
1-2 Days
Who can take advantage of the Presumptive taxation scheme of section 44ADA?
44ADA can be adopted by a person Resident in India, carrying on specified Profession whose Gross receipts do not exceed fifty lakh rupees in a financial year.
Following professions are specified profession:
1. Legal
2. Medical
3. Engineering or architectural
4. Accountancy
5. Technical consultancy
6. Interior decoration
7. Any other profession as notified by CBDT
What is the manner of computation of taxable Business Income in case of a person adopting the Presumptive taxation scheme of section 44AD /44ADA/44AE?
1. 44AD : Income will be computed on Presumptive basis, i.e., @ 8% or more of the Turnover or Gross receipts of the eligible business for the year. No further expenses will be allowed or disallowed (Turnover limit : 2crores)
2. 44ADA : Income will be computed on Presumptive basis, i.e. @ 50% or more of the Total Gross receipts of the profession. No further expenses will be allowed or disallowed. (Gross receipt limit: 50 lakhs )
3. 44AE: Income will be computed on an estimated basis. Income will be computed @ Rs. 7,500 per month or part thereof during which the goods vehicle is owned by the taxpayer, in the previous year. Part of the month would be considered as full month. (Goods Vehicle limit : 10 nos.)
Can a person whose Total Turnover or Gross receipts for the year exceed Rs. 2,00,00,000 adopt the Presumptive taxation scheme of section 44AD ?
If the total Turnover or Gross receipt of the Business exceeds Rs. 2,00,00,000 then the scheme of section 44AD cannot be adopted.
Is it required to pay Advance tax for Income under Presumptive taxation scheme i.e. 44AD/44ADA/44AE?
Any person opting for the Presumptive taxation scheme under section 44AD/44ADA/44AE is liable to pay whole amount of Advance tax on or before 15th March of the Previous year. If he fails to pay the Advance tax by 15th March of Previous year, he shall be liable to pay interest as per section 234C.
If a person adopts the Presumptive taxation scheme but he opts out from the scheme in any of the subsequent five years, then what are the consequences?
1. If a person opts for Presumptive taxation scheme then he is required to follow the same scheme for next 5 years. If he failed to do so, then Presumptive taxation scheme will not be available for him for next 5 years.
2. For example, an assessee claims to be taxed on presumptive basis under Section 44AD for AY 2017-18. For AY 2018-19 and 2019-20 also he offers Income on basis of Presumptive taxation scheme. However, for AY 2020-21, he did not opt for Presumptive taxation Scheme. In this case, he will not be eligible to claim benefit of Presumptive taxation scheme for five AYs, i.e. from AY 2021-22 to 2025-26.]
Can an Insurance Agent adopt the Presumptive taxation scheme of section 44AD?
A person who is earning income in the nature of commission or brokerage cannot adopt the presumptive taxation scheme of section 44D . Insurance agents earn Income by way of commission and hence, they cannot adopt the Presumptive taxation scheme of section 44D .