SECTION 44ADA- PRESUMPTIVE TAXATION SCHEME FOR PROFESSIONALS
Section 44ADA was inserted after Section 44AD of Income Tax Act, 1961 with the effect from the financial year 2016-2017. This section provides special provisions for computing profits and gains of profession on a presumptive basis.
The Presumptive Taxation Scheme is inserted to give relaxation to all small taxpayers who are engaged in a specified profession.
PROVISIONS RELATED TO SCHEME:
A person resident in India engaged in the following professions can take advantage of the presumptive taxation scheme of section 44ADA:-
PURPOSE OF THIS SCHEME:
With the recommendation of Justice Easwar Committee, this section was proposed for simplification of taxation of professionals
Following objects are stated to be achieved through this proposal
Who are the eligible professionals?
Persons engaged in any of the following professions:
Computation of Taxable Income in case a person opting for presumptive taxation scheme of section 44ADA:
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. However, such a person can declare income higher than 50%.
A person who adopts the presumptive taxation scheme is deemed to have claimed all deduction of expenses. Any further claim of the deduction is not allowed after declaring profit @ 50%.
While computing income as per the provisions of section 44ADA, separate deduction on account of depreciation is not available.
Provisions related to a person who does not opt for the presumptive taxation scheme of section 44ADA:
A person can declare income at lower rate i.e. less than 50% if a person does so and his income exceeds the maximum amount which is not chargeable to tax, then he is required to maintain the books of account as per the provisions of section 44AA and has to get his accounts audited as per section 44AB.
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