Blue and Beige Minimalist Annual Report Presentation

PRESUMPTIVE TAXATION FOR RESIDENTS

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PRESUMPTIVE TAXATION FOR RESIDENTS

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SECTION 44AD: PROFIT & GAINS OF BUSINESS ON PRESUMPTIVE BASIS

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A.Eligible Assessee: Eligible assessee’s are Resident Individual/ Resident HUF/ Resident Firms (excluding LLP) who has not claimed deduction u/s 10AA or 80IA or 80RRB.
B.This section is applicable for any Business except– Section 44AE Business, Agency Business, Commission & Brokerage Business.
C.Gross Turnover/ Receipts is up to Rs. 2 Crores, provided where, the amounts received during the P.Y in cash does not exceed 5% of the total turnover or gross receipts of such P.Y then limit of turnover/ gross receipts will be Rs. 3 crores instead of Rs. 2 crores.

Note: Cheque/ DD, which is not account payee, shall be treated as cash.

D.Presumptive PGBP income: Turnover/ Gross receipts * 8%, if Turnover/ Gross receipts realized by Account payee Cheque/ DD/ ECS up to due date of return filing then presumptive income will be Turnover/ Gross Receipts * 6%.
E.If assessee declares income as per Section 44AD or higher income and whose Turnover is up to Rs. 2cr/ 3cr as the case may be then assessee is not required to maintain books of accounts & get it audited.
F.If assessee declares income for any P.Y as per Section 44AD & he does not declare income as per 44AD in any of the five consecutive P.Y’s, then he shall not eligible to claim benefit of Section 44AD for 5 Years subsequent to the year in which assessee did not declare income as per Section 44AD.
G.If point (f) is applicable & Net Taxable Income is more than basic exemption limit, then assessee is required to maintain books of accounts & get it audited.

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Example: Let us consider the following particulars relating to a resident Individual, Ms. Harsha being an eligible assessee whose turnover does not exceeds Rs. 2 Crores in any of the A.Y between A.Y 24-25 to A.Y 26-27.

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In the above case Ms. Harsha, an eligible assessee opts for presumptive taxation u/s 44AD for A.Y 24-25 & A.Y 25-26. However, for A.Y 26-27, he offers income of only Rs. 10 lakhs on turnover of Rs. 2 Crores, which amounts to 5% of his gross receipts. She has to maintain books of accounts u/s 44AA & gets the same audited u/s 44AB. Since she has not offered income in accordance with the provisions of Section 44AD, for five consecutive years after A.Y 24-25, she will not be eligible to claim the benefit of Section 44AD for next 5 A.Y succeeding A.Y 26-27 i.e. from A.Y. 27-28 to 31-32.

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Particulars

A.Y 24-25

A.Y 25-26

A.Y 26-27

Total T/o (All cash)

1,80,00,000

1,90,00,000

2,00,00,000

Income offered for Tax

14,40,000

15,20,000

10,00,000

% of gross receipts

8%

8%

5%

Offered income as per 44AD

Yes

Yes

No

SECTION 44ADA: PROFIT & GAINS OF PROFESSION ON PRESUMPTIVE BASIS

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A.Eligible Assessee: Eligible assessee’s are Resident Individual or Resident Firm (excluding LLP) engaged in profession as referred to in Section 44AA.
B.This Section is applicable if Gross Receipts is up to Rs. 50 lakhs. However, if the amount received during the P.Y in cash does not exceed 5% of the gross receipts of such P.Y the limit of Gross Receipts of Rs. 75 lakhs shall apply instead of Rs. 50 lakhs.

Note: Cheque/ DD, which is not account payee, shall be treated as cash.

C.Presumptive PGBP income: Gross Receipts * 50%.
D.if assessee declares income as per Section 44ADA or higher then, he is not required to maintain books of accounts & get it audited.
E.If assessee declares income lower than 50% and his net taxable income is more than the basic exemption limit, he is required to maintain books of A/c’s and get it audited.

COMMON POINTS FOR 44AD AND 44ADA

1.

Deduction u/s 30-38 shall not be allowed. (Assume it deemed to be already applied)
2.

WDV is to be calculated considering notional depreciation every year.
3.

Partner’s remuneration & interest are not allowed from deemed PGBP.
4.

100% Advance Tax can be paid by 15Th March of P.Y.

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SECTION 44AE: PROFIT & GAINS OF TRANSPORTER ON PRESUMPTIVE BASIS

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If assesse is engaged in the business of plying, hiring, leasing such goods carriage the PGBP will be:

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Heavy good Vehicle: Rs. 1,000 per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month.

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Other Vehicle: Rs 7,500 for every month or part of a month.

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Notes:

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1.

The assessee can also declare a higher amount in his return of income. In such case, the latter will be considered to be his income.
2.

This section is applicable if assessee owns Max 10 vehicles. If assessee owns more than 10 vehicles at any time during the P.Y then this section shall not apply.
3.

Income calculated even vehicle not put to use but own by assessee.
4.

Partner’s remuneration, salary, interest etc. as per Section 40(b) shall be deductible while computing income u/s 44AE.
5.

Heavy goods vehicle means any goods carriage, the Gross Vehicle Weight of which exceeds 12,000 kilograms (12 tons).
6.

As per CBDT clarification we have to consider Gross Vehicle Weight (GMW) for calculating income however if GVW is not available then we have to consider unladen weight.
7.

Assessee opting for presumptive taxation are not required to maintain books of accounts as per Section 44AA or get them audited u/s 44AB. However, where an assessee wishes to declare income lesser than as computed u/s 44AE, he is required to mandatorily maintain books of accounts and get the same audited.
8.

Deduction u/s 30-38 shall not be allowed

9.

WDV is to be calculated considering notional depreciation every year.

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