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
Less        
Expenses 800000 4800000 8100000 9000000
Profit/loss 200000 200000 -100000 3000000

 

View Answer

Question 2

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

View Answer

Question 3

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

 

View Answer

Question 4

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

View Answer

 

 

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 

 

 

NON APPLICABILITY

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)

 

4.Companies/LLP

 

5.When Turnover >1 Cr

 

  6.All Non Residents

  1. Income Tax
  2. PGBP Income
Ask Download

About the Author

Davneet Singh's photo - Teacher, Computer Engineer, Marketer
Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 8 years. He provides courses for Maths and Science at Teachoo. You can check his NCERT Solutions from Class 6 to 12.