Presumptive Taxation u/s 44AD and 44ADA

@Saad_C @Kaushal_Soni @AkashJhaveri @Divya_Singhvi @Laxmi_Navlani can you help with this?

Hey @Saurabh

Every person whose income from business or profession exceeds 2,50,000 or total turnover exceeds 25,00,000 in last three preceding previous years then assessee has to maintain books of accounts u/s 44AA.

As mentioned in your case, you’re not mandatorily require to maintain books of accounts. However, for genuine reporting of incomes under ITR, one can regularly maintain books of accounts.

If books of accounts are not maintained then tax payer can fill details under 'No Account Cases - item 6 ’ of Schedule BS.

Hope, it helps!

Sure @Kaushal_Soni

So, I can select liable to maintain books of accounts as per section 44AA as NO
and still fill the Balance Sheet (items 1-5)where regular book of accounts are maintained.

Also, what exactly does it mean to maintain book of accounts.
I have ledger details from zerodha.
Apart from that I use my computer and internet which I claim as business expense, so just keeping the invoices of these assets is fine, or do we have to use some software like tally etc to maintain the acounts ?

When I used quicko, it filled (items 1-5) in the Balance Sheet.

Can I avail presumative Taxation if my gross income is more than 50Lakhs but income speratly from salary and professional income is less than 50Lakhs, Can I still avail presumative Taxation for my freelancing income? And salary income in normal Taxation
My salary income is 40Lakhs and freelancing income is 17Lakhs. Will I be able to file itr4 with 44AD and make my total Taxable Income as 48.5Lakhs?

Hey @Vignesh054 ,

To opt for Presumptive Taxation Scheme under Section 44ADA, the following two conditions should be satisfied:

  1. The gross receipts of the profession should be less than or equal to INR 50 lacs.
  2. The taxpayer should report 50% or more of the gross receipts as income in the ITR.

Hence, you can take the benefit of 44ADA by filing ITR-4 for professional freelancing income and don’t need to maintain books of accounts.

Further, there’s no harm to take benefit and both salary & professional income has to be reported in ITR.

Here, you can read below article for more insights about presumptive taxation and calculation of taxable income:

I hope, this helps :slightly_smiling_face:

1 Like

Greetings Professionals,
I have a doubt regarding filing my ITR. I’m a final year engineering student about to enter into job next year. However I am already working as a freelance website designer and maintainer for a company.(I don’t have a form 16 currently)
I am a little confused on how to file ITR and which ITR to file for my profile. My portfolio goes like this,

  • My Approx Salary from full time job: 4lak ctc (3,36,000/p.a in hand)

  • My current freelance earning(which will continue even after i get a full time job): 1,20,000/p.a

  • My investment towards PPF will be: 1,50,000/p.a

  • My SIP towards stocks: 5000/month (60,000/p.a)(will invest for 5+yrs)

  • My SIP towards crypto: 7200/month (86,400/p.a)(will invest for 5+ yrs)

My doubt is, should i declare that i am investing into crypto and stocks even if i don’t liquidate them for at least 5+years? If so, how?

Should i file ITR1 or ITR4?
Any help would be highly appreciated

Thank You :smiley:
Shashank Bharadwaj

@Maharshi_Shah @Kaushal_Soni Could you please shed some light on this?
Thank You

Hey @shashank_bharadwaj, if right now your only income is your professional income, then it is suggested that you file ITR 4 - Presumptive Taxation Scheme.

You can also file ITR 4 for your salaried income and professional income.
If you have any realized profits or losses from equity trading, you would have to file ITR 3 to declare your professional income and capital gains income.

Thank you for reaching out,
Yes my current income is from freelancing alone. So should I file ITR4 even if i fall under NIl Returns?
and also, as i mentioned, if i do invest into crypto and stocks and hold them for a considerable amount of time, like at least 5 yrs or so, then should i declare it anyplace? Or do i need to declare it as LTCG during the time of realisation? If so, should i file ITR3 and ITR4 both at that time?
Thank You

Hey @Shashank_Bharadwaj, it is always a good practice to file your Income Tax Returns even if you fall under NIL returns category. Also, it is advised that you file your return for capital gains at the time of realisation which according to you will be in 5 years, hence, LTCG. You only need to file 1 ITR form each assessment year which helps you declare all of your income sources. You would have to file ITR 3 if you have a professional income and income from capital gains. But, if you only have income from salary and capital gains, then you would have to file ITR 2.

1 Like

Understood, Thank you so much

I am a salaried person using deductions to get to a taxable income below 5 lakhs,
I have also started as a freelance writer part-time, how is the income earned from content writing added to the salaried income and how is the taxation carried out in such cases.
Kindly provide a detailed answer.
Also is it mandatory to get GST registration if you are working part-time freelancing in combination with the salaried profession?

Can someone clarify my question, please!

Hey @Sheirsh_Saxena, in the case where you have both salaried income and income from freelancing as a professional, it would be suggested that you file ITR 3 which allows you to enter details in both salary and professional income. Also, you would not require GST registration.

Thanks, Maharshi, may I know what section in ITR3 is to be filled for this freelancing income, please.

You would have to show this income under non presumptive professional income with the profession code as 16019.