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Section 44ada

16 March 2017

My query is on Section 44ADA (presumptive taxation at 50% for professionals) As per the section the following professionals are considered : Legal, Medical, Engineering, Architectural Profession, Profession of Accountancy, Technical Consultancy, Interior Decoration. Can someone clarify whether this will cover the profession of a person who functions as Faculty member to run classes and also prepares various content materials. The topics handled are basically practical banking, foreign exchange, accountancy, computer operations. The job is done on contract basis.

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2 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (166333 Points)
Replied 17 March 2017

As per the exact wordings of the act (sec 44ADA), it applies only to the professions coverd u/s. 44AA. And hence some professionals are of the view that the section is not applicable to any other professions.

Some professionals are of the view that the intention to introduce the section is to reduce the administrative cost over small professionals (like traders as per sec 44AD) and is not just restricted to the specified ones. Till any clarification issued by CBDT the dillema is bound to exist.

As per sec. 2(36) of IT act “Profession” is defined as Vocation, or a job requiring some thought, skill and special knowledge or profession refers to those activities where the livelihood is earned by the persons through their intellectual or manual skill. ((Addl CIT vs. Ram Kripal Tripathi (1980) 125 ITR 408 (All).

Secondly, expecting more than 50% profit margin in any activity is beyond reality. And if any assessee is ready to declare that and pay legitimate tax over the same, department should be ready to accept.

As per my earlier similar posts, I am of the view that any such professions, though not specified u/s. 44AA, requiring specific qualifications and intellectual skill would be included as 'professionals' as per section 44ADA.

For more views refer: /forum/definition-of-profession--53358.asp