Presumptive Taxation Section- 44AD, 44ADA,44AE

Presumptive Taxation Section- 44AD, 44ADA,44AE

According to provision of Income Tax Act,1961 there  is special provision for computing profits and gains of business  on presumptive basis. The  Cental Government of India give some relief to small business man from maintain books of account as per prescribed under section 44AA . Under presumptive Taxation Sections there is certain conditions.  So only eligible person can take benefit of  presumptive taxation section.

Meaning of Presumptive Taxation

Income Tax Act 1961 provide some relief to samll business man from books of account audited under section 44AB and maintain books of account for his business. under presumptive taxation scheme assess can declare his income from business at prescribed rate on total turnover during the previous.

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There there section under presumptive taxation scheme

1.Section 44AD

2.Section 44 ADA

3.Section 44 AE

Section 44AD is designed for small taxpayer (except a person playing hiring, leasingof goods carriage under section 44AE

Under section 44AD following person can  take benefit

a. Resident individual

b.Hindu Undivided Falmily

c.Resident Partnership firm ( except Limited liablilty partnership)

Following person can not adopt presumptive

-Insurance agent

-Business of playing, hiring, leasing of goods carriages

– Turnover exceeding Rs. 2,00,00,000

– A person who is earning income from  commission or brokerage

Manner of computation of Income under presumptive taxation section are as follow

A-If sales  receipts  throught cheque/bank draft, NEFT, or bank clearing system( mean digital payment receipt) 6% of total turnover or  the amount  claimed to have been earned whichever is higher,

Example: Sales receipt throught digital payment system Rs.50,00,000

Income 6% of 50,00,000 = Rs.3,00,000

or assessee  claimed that he earned profit Rs,5,00,000

Whichever higher

mean Rs. 5,00,000 inome


in above example assessee claimed  that he earned  profit Rs.2,80,000

mean Rs.3,00,000 income

B. if sales receipts any other mode

Income 8% of Rs.50,00,000= Rs4,00,000

or assessee claimed the he earned  profit Rs,5,50,000

Whicherver is higher

Mean Rs.5,50,000 income

or in above example assess claimed that he earned profit Rs.3,80,000

then Rs.4,00,000





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