Presumptive taxation, Income Tax

[shruti mittal]

Can a professional having Gross receipts less than Rs 15 Lakhs show his income on presumptive basis?

Posts / Replies

[Seetharaman K C]

Presumptive Taxation is covered by Section 44AD of the Income Tax Act , 1961 ,This excludes professions as specified in sub section (1) of Section 44AA as per Subsection (6) of Section 44AD which is reproduced below:

(6) The provisions of this section, notwithstanding anything contained in the foregoing provisions, shall not apply to—

           (i)  a person carrying on profession as referred to in sub-section (1) of section 44AA;

           (ii)  a person earning income in the nature of commission or brokerage; or

           (iii) a person carrying on any agency business.]

sub section (1) of Section 44AA specifies the professions as given below:

44AA. (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the ²[Assessing] Officer to compute his total income in accordance with the provisions of this Act.

Apart from the  above mentioned professions the profession of Company Secretary has been notified vide SO 2675, dated 25-9-1992., the profession of Information Technology has been notified vide  SO 385(E), dated 4-5-2001. and also the profession of Authorised Representative and Film Artist has been notified vide  SO 17(E), dated 12-1-1977..

Film artist includes any of the following persons as spelled out in the above SO No 17(E) dated 12-1-1977.

(i)  an actor       (ii)  a cameraman;      (iii)  a director, including an assistant director;      (iv)  a music director, including an assistant music director;       (v)  an art director, including an assistant art director;      (vi)  a dance director, including an assistant dance director;     (vii)  an editor;    (viii)  a singer;      (ix)  a lyricist;       (x)  a story writer;      (xi)  a screen-play writer;     (xii)  a dialogue writer; and    (xiii)  a dress designer.

Hence if your profession falls among anyone of the above you cannot show your income on  presumptive basis

[shruti mittal]

thank u so much

[shruti mittal]

Why the relief u/s 44AD is only for small businessman and not for small professionals? please give some logic .... i need it.

[Seetharaman K C]

According to Legislative history, this provision was introduced to encourage small businessmen to pay taxes in simplified terms without much help.Probably profession was not included as professionals are presumed to have above basic education and are expected to keep record of transactions and keep books of account