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Presumptive income

Krishna (Manager - Genesis Tax Consultant) (531 Points)

16 May 2018

Hello Sir,

Manpower consultancy gross receipt for the AY 18 - 19 is Rs 15,00,000 (All receipts generated through bank). Under the presumptive income what will be the net profit?

Should we need consider Net profit as 50% on gross receipt? or 8%

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12 Replies

Rohit Kumar Atris (Article) (32 Points)
Replied 17 May 2018

If all proceeds have been received through digital mode like rtgs/neft etc then 6% of gross receipt shall be total income.

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Narayana Moorthy (75 Points)
Replied 17 May 2018

hi rohit i think 8% please correct me if i am wrong

RAJA P M ("Do the Right Thing...!!!") (128062 Points)
Replied 17 May 2018

The "Man Power Consultancy" can file their ITR under sec 44ad (Presumptive taxation scheme as a business entity).
You can show the profit 6% if The consultancy get their receipts as Electronic / Banking mode. Otherwise they will declare 8%...

* No need show the Profit @ 50%. Bcoz, The 50% will applicable to professional incomes under sec 44ADA. It's not applicable to the consultancy....

ajaz ul haque (partner) (117 Points)
Replied 17 May 2018

क्या परामर्श देना पेशा में नही आता है?

RAJA P M ("Do the Right Thing...!!!") (128062 Points)
Replied 17 May 2018

@ Ajaz.,

I don't know Hindi...

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RAJA P M ("Do the Right Thing...!!!") (128062 Points)
Replied 17 May 2018

Dear Friends., Please reply to Mr Ajaz Question?

ajaz ul haque (partner) (117 Points)
Replied 17 May 2018

I think, consulting is not economic activity like business.

RAJA P M ("Do the Right Thing...!!!") (128062 Points)
Replied 17 May 2018

Please can you explain Yourself Dear...

Krishna (Manager - Genesis Tax Consultant) (531 Points)
Replied 17 May 2018

Dear Sirs,

Thank you for your clarifications

RAJA P M ("Do the Right Thing...!!!") (128062 Points)
Replied 17 May 2018

You are most welcome Dear Krishna...

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VARUN MAHESHWARI (79 Points)
Replied 17 May 2018

As per my understanding manpower consultancy falls under professional services and not under business. Accordingly sec. 44ADA is applicable nd 50% of receipts shall be the presumptive income

1 Like

RAJA P M ("Do the Right Thing...!!!") (128062 Points)
Replied 17 May 2018

Section 44ADA (For Small Professionals)

Section 44ADA was introduced for small professionals with the objective to simplify taxation, reduce compliance burden and facilitate the ease of doing business for certain small professionals. It also aims at bringing parity between small businesses who enjoy Presumptive Taxation Scheme under Section 44AD and small professionals.

Eligible Professions under section 44ADA

The below-mentioned professions can avail benefits of Presumptive Taxation Scheme under Section 44ADA:

EngineeringLegalArchitectural professionAccountantMedicalTechnical consultantInterior business

Computation of Presumptive Income under section 44ADA

In case of a person adopting the provisions of section 44ADA, income will be computed on a presumptive basis, i.e. @ 50% of the total gross receipts of the profession. In other words, total gross receipts from profession should not exceed Rs 50 lakh for a financial year.

Here the logic of difference to the profession...

A Civil Engineer (qualified) will doing profession his own way then it's considered as Professional income. In the same way A Construction Company doing the same work then It's Business income in the hands of Construction Company. Bcoz, Company don't want any qualifications for Engineering...

The same way a Doctor serve his own way then it ll treat Professional income. In this Case any of the Hospitals will give the same service with some Doctors it's business income in the hands of the Hospital...

As per the Query...
The Man Power Consultancy is not under the definition of sec 44ADA and Also no need any of professional Qualification or Activities...
Any of the person will start the BUSINESS of the same like You / Me / Any Person will start the Man Power Consulting. No need any Qualification like BE, MBBS, M TECH & CA...

We just treat it as Business income...
And all the receipts from. bank mode then Declare the Profit 6%....