Presumptive Taxation :Terms and applicability of Sec: 44AD - 44ADA.
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for Business and Professionals
Amendment of section 44AB.In section 44AB of the Income-tax Act, for the first proviso, the following proviso shall be substituted with effect
from the 1st day of April, 2024, namely:–– “Provided that this section shall not apply to a person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA:”. |
Analysis: All those who opt in for presumptive taxation scheme are not liable to maintain books of accounts as per section 44AB.
Amendment of section 44AD.
In section 44AD of the Income-tax Act, in the Explanation, in clause (b), after sub-clause (ii), the following
provisos shall be inserted with effect from the 1st day of April, 2023, namely:––
‘Provided that where the amount or aggregate of the amounts received during the previous year, in cash, does not
exceed five per cent. of the total turnover or gross receipts of such previous year,
provisos shall be inserted with effect from the 1st day of April, 2023, namely:––
‘Provided that where the amount or aggregate of the amounts received during the previous year, in cash, does not
exceed five per cent. of the total turnover or gross receipts of such previous year,
this sub-clause shall have effect as if for the words “two crore rupees”, the words “three crore rupees” had been substituted:
Provided further that for the purposes of the first proviso, the receipt of amount or aggregate of amounts by a
cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash.’.
cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash.’.
Amendment of section 44ADA.
In section 44ADA of the Income-tax Act, after sub-section (1), the following provisos shall be inserted with effect
from the 1st day of April, 2023, namely:––
‘Provided that in case of an assessee where the amount or aggregate of the amounts received during the previous
year, in cash, does not exceed five per cent. of the total gross receipts of such previous year,
from the 1st day of April, 2023, namely:––
‘Provided that in case of an assessee where the amount or aggregate of the amounts received during the previous
year, in cash, does not exceed five per cent. of the total gross receipts of such previous year,
this sub-section shall have effect as if for the words “fifty lakh rupees”, the words “seventy-five lakh rupees” had been substituted:
Provided further that for the purposes of the first proviso, the receipt of amount or aggregate of amounts by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash.’.
Analysis: Increased limit of for both the section is as under:- Section 44AD -- Businesses having total gross receipt / turnover -- up to Rupee 3 Crore Section 44ADA -- Professional having total gross receipt -- up to Rupee. 75 Lacs Subject to condition that Gross receipt or Turnover is received through cash than presumptive taxation is 8% of such receipt. in all other case 6% which include payments received through through banking methods. All cheques other wise than a/c payee is considered as cash transaction and 8% is applicable.
Applicable return form is ITR 4 for all presumptive tax payers, which is also available in online mode of income tax utility.
List of Documents Required for ITR 4 : (44 AD/ ADA)
- Bank Pass Book for all Saving Bank Accounts.
- Current Bank Account Statement
- Copy of Pan Card
- Copy of Aadhaar Card
- Mobile Number Register with Aadhaar
- Email Id Registered on E-filing Portal
- Investment Documents Like Mediclaim, LIC, etc.
- FD Interest Certificate.
- Other Important details.
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