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SECTION 44AD SPECIAL PROVISION FOR COMPUTING PROFITS AND GAINS OF BUSINESS ON A PRESUMPTIVE BASIS

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Applicability


  • The provisions of this section are optional for all assessees and only apply to resident Individuals, HUFs, and Firms (excluding LLPs).

  • This clause only applies if the turnover is less than Rs. crores.

  • The assessee's profit and earnings from the eligible business will be presumed to be 8% of total turnover or gross revenues if they are not claimed under sections 10AA[1], 80IA to 80RRB.


Exception


Only if the qualifying assessee is not involved in any of the following companies is this provision applicable:

  • Activities are covered by section 44AE.

  • A person practising a certain profession as defined by section 44AA.

  • A person who makes money through commission or brokerage.

  • Any individual conducting agency business.


Amended clause


By the financial amendment made in 2017, if a business's revenue during the previous year or before the deadline under section 139(1) was paid by account payee check, draught, or electronic funds transfer (ECS), 6% of those revenues will be declared as profit, or the assessee may declare more profit.

[1] Indian Kanoon (Section 10 of Income Tax Act)- https://indiankanoon.org/doc/595606/

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