Presumptive taxation for professionals.

Presumptive taxation under Section 44ADA

The benefit of Presumptive tax rates was only available to businesses. But now this benefit has been extended to professionals also.

Presumptive taxation is applicable to the professionals, whose total gross receipts does not exceed Rs 50 lakhs in a financial year.

Presumptive Tax Rate: The income of the professionals opting for this scheme would be assumed at 50% of the total gross receipts for the year.

Applicability of the scheme: The persons engaged in the following profession can opt for this presumptive Income scheme:

a. Medical
b. Engineering
c. Legal
d. Architectural Profession
e. Accountancy Profession
f. Technical Consultancy
g. Interior Decoration

The scheme is applicable only to a resident assessee, who is an individual, HUF or Partnership and not LLP (Limited Liability Partnership Firm).

No requirement of Maintenance of books of Account:

Professionals opting for this scheme need not maintain books of account required under section 44AA. They also need not get the books of account get audited under section 44AB.

Deduction for Business Expenses: No business expense is allowed to be deducted from the net income. Depreciation is also not deductible. Even though depreciation is not allowed as a deduction. Written down value (WDV) of the assets shall be considered as if depreciation has been allowed.

Can the taxpayer declare higher or lower income?

The taxpayer can voluntarily declare a higher income and pay tax on it. In case the taxpayer chooses to declare lower income than 50 % of the total gross receipts, he shall have to maintain books of accounts under 44AA and get them audited.

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