Small business men finds it really difficult and expensive to maintain books of accounts and filing of return. In order to provide relief to small taxpayer, government introduced presumptive scheme for business.
Section 44AD of the Income Tax Act, 1961 – Computation of Profits and Gains of Business under Presumptive Scheme,
- 1. Assesse should be engaged in any business other than:
- plying, hiring and leasing referred in section 44AE of the Income Tax Act, 1961,
- commission & brokerage business,
- ageny business.
- 2. Assesse should be individual or HUF or partnership firm other than LLP.
- 3. Turnover of the assessee’s business should not exceed Rs. 2crores. However, the limit has been revised to Rs. 3crores in the Budget 2023if 95% of the total receipts are received by account payee cheque or bank draft or electronic clearing system through bank account or any other prescribed mode during the previous year.
- 4. Assesse is liable to declare 8% of the gross receipts/turnover of the business as income. However, assesse can also declare 6% of the gross receipts/turnover of the business as income only to the proportion of turnover are received by account payee cheque or bank draft or electronic clearing system through bank account or any other prescribed mode during the previous year, income on remaining turnover is to be declared as 8% of the gross receipts/ turnover of the business.
- 5. Assesse opting to pay tax under this scheme is required to pay 100% advance tax by March 15th of that financial year.
- 6. Assesse is not required to maintain books of accounts.
- 7. Assesse is not required to get its books audited.
- 8. Assesse is not allowed to avail any: –
- Exemption under section 10A / 10AA / 10B / 10BA
- Deduction for expenses under section 30 to 38.
- 9. Scheme once opted can be continued for 5years. If assesse decided to file return as regular business before the end of these 5years, assesse cannot avail the benefit of this scheme for another 5years.
- 10. Assessee is required to file ITR-4, a simplified return,than ITR-3.
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