What is Section 44AD Persumtive Income of Business?

  1. It is special scheme for small  business(Resident Individual/Partnership/Huf) whose turnover is up to 1 Crore
  2. These business need not maintain any books of accounts nor get their accounts audited
  3. In their case 8% of turnover is deemed to be their PGBP Income (8% is the Minimum Amount,Assessee can show higher amount also)
  4. No deduction of any expenses under section 30 to 38.is allowed .
  5. If the assesse feels that his profit is less than 8% of turnover then he has to compulsory maintain books of accounts and get the accounts audited under Section 44AB.
  6. This scheme is not for Specified Professions  like Accountant/Interior Designers/Film artists/IT Professionals/Company Secretary/Doctor/CA/CS etc  

Section 44AD of Income Tax Act - Presumptive Income of Business  - Presumptive Businesses Income


Question 1

What is the PGBP Income of a proprietorship (Individual) as per Section 44AD in following cases 

Particulars Case 1 Case 2 Case 3 Case 4
SALES 1000000 5000000 8000000 12000000
Expenses 800000 4800000 8100000 9000000
Profit/loss 200000 200000 -100000 3000000


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Question 2

 Can in Case 1,assessee show PGBP income of 200000 in ITR ?

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Question 3

Can in Case 2,assessee show PGBP income of 200000 in ITR ?


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Question 4

Can in Case 3,assessee show loss of 100000 in ITR ?

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Other Points

  • Assessee cannot claim deductions under Section 30 to 38. But they can claim other deduction like Chapter VIA Deduction (Section 80C) etc. or section 40 (b) Deduction for partners.
  • They also do not have to pay advance tax  on this Income.
  • In case,they sell their assets,Capital Gains will be computed assuming Depreciation has been charged on Assets 




1.Specified Professions u/s 44AA

like Accountant/Interior Designers/Film artists/IT Professionals/Company Secretary/Doctor etc)


2 Persons Claiming Certain Deductions u/s 80IA to 80 RRB


3..Section 44AE Business

(Business of Plying ,hiring,leasing Goods Carriages)




5.When Turnover >1 Cr


  6.All Non Residents

  1. Income Tax
  2. PGBP Income

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 9 years. He also provides Accounts Tax GST Training in Delhi and Pune.