Presumptive Tax u/s 44AD

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Mahendra Naik (Querist)
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27 August 2010 I am having a mutual fund distribution firm (sole proprietorship)with commission income (brokerage) of Rs. 8 Lakhs/annum. Can I claim presumptive taxation by declaring income at 8% of 8 Lakhs i.e. Rs. 64,000 even though my actual profit would be much more ? If yes, how do I account for the additional profits in my
books of accounts?

Is this provision also applicable to partnership firms having turnover below Rs.60 Lakhs?

Thanks and Regards

CA Vijay Kumar Gupta

CA Vijay Kumar Gupta (Expert)
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27 August 2010 Sec.44AD of The Income Tax Act,1961 is not applicable for commission agents.

Arun

Arun (Expert)
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27 August 2010 Sec 44AD Applies to Individual , HUF , firm

Turnover should not exceed Rs.60 lakhs

Eligible assessee should be engaged in any business except business u/s 44AE

Can return lower income than deedmed profit referred in sec 44AD (8%)

in such case books needs to be maintain

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Mahendra Naik

Mahendra Naik (Querist)
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28 August 2010 I have read in DNA Money that in the Budget of 2009 sec 44AD was made applicable to all businesses except those covered by sec 44AE. In view of this can I claim presumptive taxation as mentioned in the above question since the business of brokerage from mutual fund distribution since it is not covered u/s 44AE.

CA Vijay Kumar Gupta

CA Vijay Kumar Gupta (Expert)
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28 August 2010 In my opinion, it applies to business only. Earning commission, in my opinion is a vocation which is covered under profession.

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Mahendra Naik

Mahendra Naik (Querist)
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28 August 2010 Dear Mr.Gupta,

Thanks for taking interest in helping me with my query. Can I then claim that I am a professional and still opt for 44AD, where the gross receipts of the profession are less than 20 Lakhs, since 44AD is also applicable to professionals?

I would appreciate if you could kindly throw some light on the matter.

Warm Regards

CA Vijay Kumar Gupta

CA Vijay Kumar Gupta (Expert)
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28 August 2010 Sec.44AD is not applicable to profession.

Arun

Arun (Expert)
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28 August 2010 U/s 28 of the income tax act profession which involves the idea of occupation requiring either purely intellectual skill or any manual skill.

From the above Mutual fund distribution is not a profession.

Further Sec 44AD amended with effect from A.Y 2011-12 with a word inserting "any business". Till such time the existing provision applicable to business referred under the sec 44AD.

since Mutual fund distribution is not coming under the provision of Sec 44AD for the A.Y 2010 - 11. You can not enjoy the benefit of presumptive income U/s 44AD

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Mahendra Naik

Mahendra Naik (Querist)
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28 August 2010 Dear Mr.Arun,

Thanks for your reply.

Can I claim benefit of presaumptive tax u/s 44AD for A.Y. 2011-12 i.e. F.Y. 2010-11.

Thanks & Regards