If this Section is applicable to all business except Professions and that covered under section 44AE.
(1) Does it means that it is better that business such as Tuitions, Beauty Parlours, Hobby Classes, Retail Stores, Milk Centers, & other business which has turnover less than 60 lacs should take benefit of this section and declare 8% income of the turn over and remain free from maintaining a/c's books, etc.?
- for every business there is some other tax related to nature of business, viz service tax, vat, excise etc, which enforce the assessee to maintain set of records for compliance to the related laws.
- The assesee does not get exempted to maintain books of accounts but he is not compelled to make it 100% true as per audit norms, but he can make presumptive declaration based on his funds flow regarding the income. and opening /closing stock/ debtors and credits and other assets and liabilities, he does not compelled to reconcile them in very true manner but in gross.
(2) What if an assesse has any of the aforesaid business but his profit is more than 8% of his Turn over, still should he take advantage of this section? (can the AO take objection, that you have no expenses and your margin is more than 8% of the turnover)
- Yes, he is asked to declare 8% or more, but not less than 8%....AO will not issue any query on excess income, unless he has specific information for concealment of excess income.
- Filing return under 44AD does not exempt the assessee to get selected for regular or scurtiny assessment.
(3) What if we take advantage of this section this year, do we have to continue this in the next F.Y also?
- it depends on the nature and turnover of the assesse, 44AD is optional, assessee may use this option to declare presumptive income or declare exact as per his books. but if the net taxable profit decrease to the extent less than 8% he would be shirted to 44AB for audit of books.
Note.: How we will come to know if his NP is more or less than 8% of turn over, only after we maintain Accounts Books and if accounts books are maintained then Why take advantage of this Section?
- say a person started business with 5 lacs of capital, and end of year he realize that he has 7 lacs in bank, no debotrs / no creditrs/ stock of 10000 only, so his excess funds is there with net profit only, on this assumption he can "offer" his presumptive profit for taxation.
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