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Regarding 44ADA 5 year rule

Madhu S (11 Points)

23 August 2018

I have opted to 44ada (professional 50%) for the AY 2017-18, now I am opting to 44ab I for the AY 2018-19 . Can I opt again to 44ADA for the AY 2019-20?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (166790 Points)
Replied 23 August 2018

Yes........ no restriction/s.....

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(Guest)

Agreed with Shri Dhirajlal Rambhia

Aliasgar Samniwala (118 Points)
Replied 23 August 2018

5 consecutive years TAX AUDIT rule is only applicable if you are eligible assessee opting 44AD and offer income chargable to tax less than 8%.

5 years limit is only Applicable in case of 44AD.

its NOT applicable in case you are PROFESSIONAL falling under sec 44ADA.

for AY 2018-19 you are eligible for opting 44ADA.

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CA P V N Varma (CA ) (609 Points)
Replied 23 August 2018

No the same is Applicable to 44ADA also.. you should read sec 44ADA for clear understanding

Provisions to be applied if a person does not opt for the presumptive taxation scheme of section 44ADA and declares his income from profession at lower rate (i.e. less than 50%) A person can declare income at lower rate (i.e. less than 50%), however, if he does so, and his income exceeds the maximum amount which is not chargeable to tax, then he is required to maintain the books of account as per the provisions of section 44AA and has to get his accounts audited as per section 44AB.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (166790 Points)
Replied 23 August 2018

Here, the query is not for income from profession to be declared at lower than 50% rate. So, sub-sec. 44ADA does not apply.

Query specifically is for any restriction on opting out and re-opting sec. 44ADA.....

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RAJA P M ("Do the Right Thing...!!!") (127921 Points)
Replied 23 August 2018

My Dear Mr Dhirajlal Rambhia Sir.,

Assesee opt u/s 44ada in ay 17-18 and Opt out Ay 18-19 with Tax Audit...
If opt out from presumptive scheme then Assessee can't avail the benefit of presumptive taxation to next 5 years...

Then Which way above said query is opt sec 44ada again ay 19-20...?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (166790 Points)
Replied 23 August 2018

As per amendment in finance act, 2016...

Sub-sections 44AD of IT act., reads as........

(4) Where an eligible assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1).

(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.]

And Sub-sec 44ADA reads as........

(4) Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (1) ofsection 44AA and get them audited and furnish a report of such audit as required under section 44AB.]

The condition of next five years is missing!!! in sec. 44ADA........

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