Section 44ADA: Profits and Gains of Profession on presumptive basis

The benefit of presumptive taxation scheme was earlier given to Businesses, which has now extended to Professionals also. Thus, Professionals whose Gross Receipts are not more than Rs. 50 Lakhs in a financial year, can enjoy the benefit of presumptive taxation u/s 44ADA from FY 2016-17.

  • The scheme shall be applicable to individuals, HUF’s and partnership firms excluding Limited Liability Partnership Firms.
  • The Persons engaged in the below mentioned profession can opt for this presumptive taxation scheme u/s 44ADA and net income of such person would be assumed to be 50% of the gross receipts for the relevant financial year:
  1. Legal
  2. Engineering
  3. Medical
  4. Architectural Profession
  5. Accountancy Profession
  6. Technical Consultancy
  7. Interior Decoration
  8. Authorized representatives
  9. Film Artists
  10. Certain Sports related person
  11. Company Secretaries
  12. Information Technology
  • An assessee who opts for this presumptive scheme, shall be exempted from maintenance of books of accounts.
  • The assessee cannot deduct any business expenses against the income under presumptive taxation scheme.
  • However, an assessee would be required to prepare books of accounts u/s 44AA and get his accounts audited, in case the assesse claims that profits and gains are less than 50% of gross receipts.
  • Unlike as in Section 44AD for businesses, a professional can opt in and out of the scheme at anytime without the 5years restriction.
  • ITR 4 would be applicable under this.

Section 44AE: Profits and Gains of Business of Plying, Hiring or Leasing Goods Carriages

In case of an assessee who owns not more than 10 goods carriages or heavy goods vehicles during the previous year and is engaged in the business of plying, hiring or leasing such goods carriages, then the income of such business is taxable under the head “Profits and gains from Business& Profession”, your net income from goods carriage shall be assumed as Rs. 7,500 per month or part of a month for each Light Goods vehicle and Rs.1,000 per ton per vehicle per month for Heavy Goods Vehicle (Budget 2018- Applicable for FY 2018-19).

  • The assessee cannot deduct any business expenses against the income.
  • The scheme shall be applicable to individuals, HUF’s and partnership firms excluding Limited Liability Partnership Firms
  • An assessee who has possession of a goods carriage, whether taken on hire purchase or on instalments basis and for which the whole or part of amount is still due, shall be deemed to be the owner of that goods carriage.
  • Once the presumptive taxation scheme u/s 44AE has been opted by the assessee, he is required to file Income tax return under the presumptive taxation scheme only for a period of 5 years.
  • In case a taxpayer has filed the return as a normal taxpayer under presumptive taxation scheme or opted out of presumptive taxation scheme, then he will be ceased to opt for benefit of presumptive taxation scheme for the next 5 years.
  • ITR 4 would be applicable under this.