For small proprietorship and partnership business

  • There is no need to maintain books of accounts and get accounts audited by CA
  • They can straight away show 8% of turnover as Profit and pay Income tax on it
  • (As per Section 44AD)  Upto F.Y 2014-15

Note:-8% is Minimum Profit to be shown, Assesses can show more than 8% profit also

 

What if assess show less than 8% profit or loss?  

It is not allowed as per Section 44AD

He has to compulsorily gets accounts audited and pay tax on it.


Note:-

This Scheme is applicable for Small business whose turnover is upto 1 crore(Form Financial Year 2016-17,limit is increased to 2 Crore )

This scheme only for Proprietorship and Partnership who are Resident

 

Section 44AD Scheme now 6% for non cash payment

Form FY 2015-16 (AY 2016 - 17)

  • If Turnover of Business upto 1 Crore,then 8 % of Turnover is Profit
  • No need to make books of accounts
  • No need to do Audit

  • Section 44AD Scheme
  • For FY 2016-17 (AY 2017-18) onward
  • If Turnover of Business upto 2 Crore,then
  • 8 % of Turnover is Profit for Cash Transactions
  • 6% of Turnover is Profit for Other Transactions
  • No need to make books of accounts
  • No need to do Audit

While Others Changes are applicable from FY 2017-18 (AY 2018-19), this budget change is applicable from FY 2016-17 (AY 2017-18) onwards

 

DOWNLOAD AND TRY 

Q1 A

Suppose a person has turnover of 20 lacs( 15 lac in cash & 5 lac in bank

What is his business Income How much Income tax he is payable by him

View Answer

Q1 B

Can person show his Income to be 350000

View Answer


Q1 C

Person Claims that he has actually made a profit of only 50000
Can he show this profit in return?

View Answer

Q1 D

Person Claims that he has actually made a loss of 30000
Can he show this loss in return?

View Answer

Q2


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 (80% cash, 20% Bank) 1000000 5000000 8000000 25000000
Less        
Expenses 800000 4800000 8100000 9000000
Profit/loss 200000 200000 -100000 16000000
View Answer


In Case 4,person has to compulsorily maintain books of accounts and get accounts audited,he cannot claim Section 44AD 
Note:-

Also in Case 3,if person wants to show loss,he also has to compulsorily maintain books of accounts and get accounts audited,he cannot claim Section 44AD

 

Q3
What is the PGBP Income of a proprietorship (Individual) as per Section 44AD in following case ?

View Answer

 

  1. Practical Income Tax
  2. Income Tax for Small Business
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About the Author

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .