Presumptive income

Hi,

1.Yes, you can show presumptive income of Rs 3.2 lacs (i.e. Rs 40 lacs * 8%) in the Income Tax return

2. It is covered u/s 44ADA because (Nature of Business Code : 14001) specially for services.

Ans 1. Yes, if assessee opted for presumptive taxation as per section 44AD they can show 8% or 6% income as the case may be(Non- Audit Case).

Ans 2. it comes under Section 44AD, Services covered under section 44ADA as follows:

1) Legal

2) Medical

3) Engineering or architectural

4) Accountancy

5) Technical consultancy

6) Interior decoration

7) Any other profession as notified by CBDT

1. Yes you can declare profit of 3.2 lacs. Higher profits can be declared voluntarily.

2. It comes under 44AD.

1. Yes u can declare the presumptive at 8%.

2. The software development business is also covered under section 44AD as section 44AA enlists the engineer so the software developer is similar to software engineer.

Q. presumptive income

ans. according to the section 44AD presumptive income

Net profit will be shown is minimum amount of profit if your earned profit higher than the rate provided then your are liable to pay tax on the higher amount.

Rate of minimum presumptive income is as under

A. at rate of 8% in case of sale /turover received in cash

B. at rate of 6 % in case of other than cash means cheque/demand draft/ or electronic clearing system /rtgs/neft

so you have to shown profit of Rs 7 lacs (not Rs 3.2) lacs

Ans. software development is specified profession under section 44AA and income is covered under the preview of section 44ADA not in the 44AD

1. if you want you can show higher income as well.However, as per section 44ADA income should be atleast 50%.

2. It will be under 44ADA

Well, both sections are for computing tax on presumptive basis but are applicable to different assessee.

As per section 44AD, you can pay minimum of 8% of your total turnover if you are engaged in business to avoid maintenance of books of account provided your turnover doesn't exceed 2 cores in a FY.In case where all incomes are digitally earned i.e earned via cheque, NEFT, RTGS or any non cash mode, profits shall be assumed at 6% for turnover less than Rs 2 crores.

Whereas, section 44ADA was made for professionals whose annual turnover doesn't exceed 50 lacs. Here, the rate of 8% is increased to 50%.

The following are considered as professionals who can make use of this Section:-

Legal

Medical

Engineering

Architectural Profession

Profession of Accountancy

Technical Consultancy

Interior Decoration

Other notified professionals

Authorized representatives

Film Artists

Certain sports related persons

Company Secretaries and

Information technology

Trust this clarifies your query.

Hi

1. Yes, you can show 3.2 lacs profit by opting for 44AD. You need not maintain books of accounts.

2. Categorization of software development in business or profession is a subjective and litigative issue. It would depend on your nature of activities undertaken.

In general terms, it is a profession and not a business. Choosing 14001 code and filing presumptive taxation under section 44AD would lead to notice for defective return. 14001 is specifically for services and thus only 44ADA can be opted.

Answer to Q.1

There is view that the assessee can just declare the income to be 8% of the turnover.

1. Yes

2. 44ADA

Hi,

1. Yes, he can claim the profit as 3.2 lacs.

2. It comes under the purview of 44ADA.

1) If you want to opt for presumptive income under section 44AD then Yes you can show income of Rs. 3.2 lakh ( if receipts is through banking channel then 6% of t/v i.e. 2.4 Lakh) however you want to prepare P & L and Balance sheet and want submit that balance sheet to bank etc. then you must declare profit as per books of accounts.

2) Software development is falls under section 44ADA however if you are in business of developing the software and then sell it as package software then it will be covered under 44AD.

1.Yes, You are right

2. It is covered u/s 44ADA because (Nature of Business Code : 14001)

1. Yes, you can

2. 44ADA. Nature of Business Code : 14001-Specially for services.

1. As per Sec.44AD profit not less than 8% of the turnover is to be declared. In your case as your turnover is Rs.40Lakhs Profit should not be less than Rs.3.2 Lakhs. Even though your actual profit is Rs.7 Lakhs you can declare any amount not less than Rs.3.2 Lakhs.

1) Yes 3.2 lacs is correct amount

Note: if your gross receipts is received via online mode (other than cash) than you are allowed to just show 6% only & for cash receipts 8%, now it's upto you too show more profit or not.

Neither your case will come in scrutiny nor any hazel by govt. dept

2) Software development is performed by technical or by those who are super specialized in that task i.e engineer hence it comes under the purview of "Business from Profession" therefore Section 44ADA will be applicable

Hi,

1. Yes. 3.2 lakhs can be shown as presumptive income.

2. It will be under 44ADA

Regards,

Nikhil.

Yes, Assessee can show presumptive income of Rs. 3.2 Lacs

1) Yes you can show it.

2) Yes HUF is eligible.