Section 44ADA of Income Tax Act: Taxation for Professionals

Section 44ADA of Income Tax Act means estimating the income of an assessee who is engaged in any profession referred in section 44AA(1).

Budget 2023 Update

Turnover limit has been increased from Rs 50 Lakh to Rs 75 Lakh for Professionals.

Eligibility

Only individual, Partnership firm (other than LLP) who are resident.

Professional Persons Covered u/s 44ADA

• Advocates
• Bloggers
• Youtubers
• Engineers
• Chartered Accountants
• Architect
• Artist
• Doctors
• Interior Decorates
• Actors

Features of Section 44ADA of Income Tax Act

• Gross receipts should not exceed Rs 50 lakh or 75 Lakh.

• If Income is less than 50% of gross receipts then books of accounts need to be maintain.

• Once Section 44ADA of Income Tax Act opted, professionals can switch back to normal taxation in future years.

• Partnership firms availing this benefit cannot claim a deduction for partner’s remuneration.

• Assessee can claim deduction u/s 30-38 including unabsorbed depriciation and allowance.

• Eligible assessee should pay the advance tax by 15th March of the financial year.

Turnover limit

• Gross Receipt upto 50 Lakhs
• Rs. 75 lakhs if cash receipt upto 5% of total turnover

Computation of minimum profit

Income will be calculated at 50% of the total gross receipts of the profession.

What to do if the income is declared lower than 50%?

If income declared is lower, than tax audit is mandatory.

Related Articles

44AD of Income Tax Act – Click Here

Section 44AB of Income Tax Act – Click Here

Tax Audit Report – Click Here

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