Return under ssection 44ad for f.y. 2016-17

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 July 2017 I am partner in a firm.Suppose the firm's turnover For the F.Y. 2016-17 is Rs.48,00,000/-. Net Profit before interest to partner and salary is 9,00,000/- LAKHS Now if i want to file return under 44AD i will have to Pay tax on Rs. 2,88,000/- (i.e,6% of 48 Lakhs). So can i give interest and remuneration to partner for the balanced amount of Rs.6,12,000/- (9 Lakhs - 2.88 Lakhs) to make my profit as per section 44AD ? As in section 44AD it is mentioned that no salary or interest is allowed as deduction, does it mean that we can not deduct salary and interest from 2.88 Lakhs and can only deduct from 9 Lakhs or does it mean that we cannot at all give remuneration or interest to partner in case we are opting for 44AD and i will have to pay tax on 9 lakh rs. ?

Amol S Joglekar

Amol S Joglekar (Expert)
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19 July 2017 44AD is a presumptive taxation section.
6% is for .......in respect of the amount of total turnover or gross receipts which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account during the previous year
Else it is 8%
If you opt for 44AD....@6% interest, remuneration etc shall be presumed to have been given and you will be required to pay income tax on 288,000.
(In cse your net profit is more than 288,000, It is advisable to show real profit than the presumptive one)