I have question, i will share some examples, can you please clarify my doubts.
I am working profession on IT and all my IT income for tax are taken care by the company based on my declaration etc, I have other source of income from goolge ads in website.
So for example, taxable income in IT is (~45L) and other income from ads (~24L), so my total income lets say its 66L. Can i show these ad income under Section 44ADA and show 12L (50%) as profit and 12L as expense. If so do i need to show 12L (50%) expense receipts while filing or will IT may issue notice.
If i do this, as per my calculation, income tax i need to pay for 12L is coming around ~6.2L.
The income from IT will be considered as your Profession and hence you can opt for the presumptive taxation scheme u/s 44ADA for that income as it is up to âš50 lakhs for FY 2022-23.
The income from Google ads will be considered Income from Other Sources and will be taxed at the applicable slab rate.
The presumptive taxation scheme reduces the compliance burden on small professions. Under section 44ADA, profits are presumed at 50% of the gross receipts and you pay tax on the same.
Hence, 50% is assumed to be your expenses and there shall as such be no notice from the AO asking for the expense receipt since youâve opted for the presumptive scheme.
Hi!
My question is this :
As per the act, if I want to show a lower profit % than those stipulated, I need to audit my books. But it also says that if my Total Income is below the basic exemption limit, I need not audit my books. Does this total income only include 44AD/ 44ADA profit from my business or does it include other heads of income as well?
In the case stated by you, the total income is the net taxable income which includes all the other incomes and the chapter VI-A deductions. If the net taxable income is more than basic exemption limit audit is required if opting for 44AD/ADA.
I have a Salary plus Other source income of ~ 2 Lakh. And also have below first ever F&O trades
Turnover ~ 10 Lakh
Profit after expenses ~1.2 Lakh (Which is ~12% of turnover)
As per Presumptive taxation I read like it is enough to show 6% profits , is that I can opt for the scheme(not to maintain book of accounts) and show only 6% of turnover as overall profits and file tax ? Or Mandatory to show full profits as income from Business and file tax returns ?
Should I have to maintain Book of accounts while not opting for Presumptive taxation and showing full profits ?
You must declare 1.2 lakhs as your profit (which is the actual profit) and is higher than 6% of your turnover if you opt for the presumptive scheme while filing your taxes.
If you opt for the presumptive scheme, you will not be required to maintain books of accounts.
Hi Niyati, I am getting my previous saving from my foreign bank account to indian savings account and sometimes bother also transfers from abroad to me. Do I need to show this while filing tax under 44ada and if yes, where exactly I can show? Thanks.
44ADA includes only the professional income. There is no such requirement to show your savings being repatriated to India in ITR but for the funds transfered by your brother will be treated as Gift income which is required to be reported under IFOS head.
I donât have any expenses. Shall I simply assume 50% of income as profit irrespective of the amount I have earned or the difference earned amount - expenses as profit?
Are deductions like expenses, insurance premiums, bank/fd interest etc allowed?
My earned amount doesnât match the turnover value shown on GST portal and deadline to update it is over. Shall I take real value or the value from GST Portal?
Suppose we have availed 44AD for last many yearsâŚAnd now it had exceeded limit of 2 cr. So obviously I will not be able to use Presumptive Taxation even if we wantâŚ
But from next year if my gross turnover again falls down within limit, then also 5 year restriction is applied??? As we never opted out because we wanted toâŚIt was turnover limit which forced us.
Kindly clarify in this⌠I have gone through some article where it is said that I can re-opt as exceeding turn over was the reason behind opting out
Hi @CA_Niyati_Mistry,
Thank for this article. I am new to this section and would like to have more info.
I am getting new opportunity as a professional, freelancer who will work from india and middle agency will transfer the fund from $ to INR. This is like 1 year contract.
My approx salary will b around; 50 lacs per ann and they will deduct 10% TDS each month.
As i seen this article, understood that can opt for 44ADA/ ITR 4 using presumptive tax and only show 25 lacs as income. Please confirm
Can show my expenses 80c, 80D, telephone, Internet expense ?
I heard about GST, if account is getting 20 lacs entry. Please guide m whether need it and if yes, how to save GST? How to exempt?
can i ask to deposit salary in NRE account
I will get only salary slip from company, do i need to prepare any invoices etc?
While filling ITR NEXT year , do i need to show any earning in NRE? as i have some fixed deposit etc?
No, the 5 year restriction will not apply here. You have completed more than 6 years in presumptive taxation and you were forced to opt out as the turnover limit crossed for that year. In the next year when the turnover drops, you can re-opt for presumptive taxation.
From FY 2023-23, the turnover limit for professionals has been increased to 75 lakhs.
Under the presumptive taxation scheme sec 44ADA, the profits are presumed at 50% of the gross receipts. However, if you receive a salary, then you cannot opt for this presumptive scheme as it is only for business & profession.
If this is your salary income then you cannot claim telephone and interest expenses. However, you can claim the Chapter VI-A deductions such as sections 80C & 80D.
GST will not be applicable in case of salary income.
If youâre not an NRI, you cannot deposit your salary in an NRE account.
No, if you are receiving a salary, you need not prepare any invoices.
If youâre a resident, your global income is taxable.
Yes youâre required to file ITR to claim the TDS deducted as tax credits and hence reduce your tax liability.
Hope this helps. For any further assistance, you can also Ask an Expert
I will have fixed term 1 year contract with 3rd party which will do only money transactions from $ to INR⌠this is not employment and looks professional/ technical services to foreign client.
So still i need to go with normal income tax slab or can get advantage of 44ADA?
It depends on the contract entered by you, whether it says it is salary or contractual payment.
If it is a contractual payment, then you can opt for the presumptive scheme u/s44ADA.