44AD and 44ADA

This query is : Resolved

Guest

Guest (Querist)

03 June 2017 Persons opting for 44AD or 44ADA is not required to maintain books of accounts and documents.. Does that mean that they are not required to maintain proof of any expenditure or income??

Nikhil Kaushik

Nikhil Kaushik (Expert)
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03 June 2017 they are expected to maintain record of gross receipts, bank statements etc.

Guest

Guest (Querist)

03 June 2017 do they need to maintain bills and receipts for expenses ??

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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14 July 2024 Proof of Expenditure and Income:
Maintaining Documents: While books of accounts are not required, taxpayers under Section 44AD and Section 44ADA must maintain proof of:

Income earned (such as invoices, bills, receipts, contracts, etc.).
Expenditure incurred (such as bills, invoices, vouchers, receipts, bank statements, etc.).
Verification: The tax authorities may ask for these documents during assessment or scrutiny to verify the income declared and expenses claimed.

Importance of Documentation:
Compliance Requirement: Proper documentation is crucial to substantiate the income and expenses reported under presumptive taxation.
Audit Requirement: If the income declared under presumptive taxation is less than the prescribed rate (e.g., 8% of turnover for Section 44AD), the taxpayer may be required to undergo audit under Section 44AB, and proper documentation will be necessary.