Hello Guys, I'm currently providing marketing services to an overseas client (not in India) so, to get paid I want to initiate a company. I wanted to know am I under 44Ad or 44ADA?
Dear Sir,
Hope you are doing well !!
The services provided by you would be considered under business in income tax and therefore you are eligible for 44AD.
You don't fall in the list of professional mentioned u/s 44AA.
Also, 44AD not only covers business but also service because 44ADA covers only professional and 44AE plying business so other than that everything will be covered under 44AD.
It is advisable to take a phone consultation for detailed discussion.
Hi,
The description provided by you falls within the ambit of section 44ADA -technical assistant and not 44AD.
You are a professional.
We can discuss further over the call.
Dear sir,
The presumptive taxation scheme of section 44ADA is designed to give relief to small taxpayers engaged in specified profession.
Eligible persons who can take advantage of the presumptive taxation scheme of section 44ADA
A person resident in India engaged in following professions can take advantage of presumptive taxation scheme of section 44ADA:-
1) Legal
2) Medical
3) Engineering or architectural
4) Accountancy
5) Technical consultancy
6) Interior decoration
7) Any other profession as notified by CBDT
Manner of computation of taxable income in case of a person adopting the presumptive taxation scheme of section 44ADA
In case of a person adopting the provisions of section 44ADA, income will be computed on presumptive basis, i.e. @ 50% of the total gross receipts of the profession. However such person can declare income higher than 50%.
In other words, in case of a person adopting the provisions of section 44ADA, income will not be computed in normal manner but will be computed @50% of the gross receipts.
Confused. The first answer says yes, the second says no and then the third one is neutral Guys, which one is correct?
Firstly, company is not eligible for claiming 44ad or ada.
Further, it's very contentious issue and very fact specific. I would generally advise not to go for this scheme unless facts are very peculiar and there is huge saving in the presumptive scheme.
The provisions relating to presumptive taxation scheme prescribed under section 44AD are not applicable to resident assessee who is a private limited company.
But, as an individual you can take the benefit of section 44ad.
We have handled such cases before.
It is advisable to take a phone consultation for detailed discussion.
Hi
1. Section 44ADA is a special provision for calculating the profits and gains of small professionals in certain circumstances. Section 44ADA was introduced to extend the scheme of simplified presumptive taxation to specified professionals. Earlier, the presumptive scheme of tax was applicable only for small business. The presumptive scheme of taxation reduces compliance burden on small professions and facilitates ease of doing business. Under the presumptive scheme of taxation, profits are presumed at 50% of the gross receipts.
The following Indian assessees are eligible:
Professionals mentioned under Section 44AA of the Income Tax Act, 1961, whose total gross receipts are less than Rs 50 lakh in a year are the eligible beneficiaries.
In case if you start a company then this section is not applicable.
You can opt for presumptive taxation under section 44ada
44ADA covers only a limited profession which are as follows: legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration.
I don't think you come under any of the above if you are providing marketing service. I think you are handling advertisement for foreign clients i.e. how much one should invest in google ads, how much in instagram etc i.e. digital marketing and although its a service but not all services are covered under 44ADA.
Hence you would be covered under 44AD.
Further if you are thinking of opening a private limited company you cannot take benefit of 44AD or 44ADA.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
Hi,
44ADA is for Marketing Service but It is available to Individual Only and not to Company or LLP.
I hope your confusion must be removed, if still need help, feel free to connect.
Regards
Hello,
Sec. 44AD or 44ADA Presumptive Taxation Scheme is available to Individuals, HUF, Partnership Firm. A company is not eligible to claim this scheme.
You should declare this income under Sec. 44ADA.
I hope this answer satisfies your requirements.
Regards,
CA Hunny Badlani
You will be covered under 44AD.
If you are working as a sole proprietorship, you may claim presumptive taxation scheme under section 44AD.
However, if you have incorporated a company, such benefit shall not be available.