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Sec 44ADA of income tax act 1961

Tina Jain (CA) (250 Points)

02 March 2018

what if professionals dont adopt 44ADA and maintain books of accounts which is showing profit less than 50% say 46%, and whether in that case audit is required if it is 46% profit of gross receipts

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9 Replies

Teena. Ganatra (Working) (37 Points)
Replied 02 March 2018

Yes...

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sagar parakh (189 Points)
Replied 02 March 2018

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.

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Pradeep T K (Student) (46 Points)
Replied 02 March 2018

An eligible person engaged in eligible profession* under section 44ADA can declare his income @ 50% without meeting the requirements of section 44AA and 44AB. However, if the eligible professional who claims that the income to be lower than income determined under Section 44ADA and the income exceeds the maximum amount which is not chargeable to tax, then he should maintain books of accounts as per section 44AA and required to be get audited by a Chartered Accountant.

*Eligible persons who can take advantage of the presumptive taxation scheme of section 44ADA ;

A person resident in India engaged in following professions can take advantage of presumptive
taxation scheme of section 44ADA:-
1) Legal
2) Medical
3) Engineering or architectural
4) Accountancy
5) Technical consultancy
6) Interior decoration
7) Any other profession as notified by CBDT

If your case falls within eligible person engaged in eligible profession and supposed to claim income lower than the income determinable under section 44ADA and income exceeds the maximum amount which is not chargeable to Tax, then the assessee should maintain regular book of accounts and has to get his accounts audited as per section 44AA and 44AB respectively of the Income Tax Act.

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Tina Jain (CA) (250 Points)
Replied 02 March 2018

so in case if i am having gross receipts of 526000 then in that case if i maintain books of accounts then my profit should be derived after deducting expenses should be more than 263000

Gagan Aggarwal (226 Points)
Replied 02 March 2018

requires audit

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Pradeep T K (Student) (46 Points)
Replied 03 March 2018

As Ms. Teena Jain said, if the individual assessee is having gross receipts of Rs.5.26 Lakhs and the income is lower than the income computed under section 44ADA, theoretically he has to maintain books of accounts and also has to get audited.

Practically, if you declare your income as per section 44ADA, then the assessee will have an income of Rs.2.63 lakhs.

Assuming that the information is for the A Y.2017-18 and the total income of the assessee does not exceeds Rs.5 lakhs, then the assessee won't have to pay any tax as the total income falls below Rs.5 lakhs therefore Govt. provides the marginal tax payer like them with a rebate U/s 87A upto Rs.5,000 on tax payable. So there is no need to claim the actual expenses, simply declare your income under section 44ADA and file your return of income.

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