Page 40 - Banking Finance MAY 2017

ARTICLE

Presumptive income for professional: X No expenses are allowed to be deducted from income.

Sec 44ADA X Professionals need to keep proper records of their ex-
penses.
Concept of presumptive income which was earlier applicable
to business only is now extended to professionals. A new X No advance tax has to be paid.
section 44ADA has been specially inserted to the act. Sec- X There is no need to get the accounts audited and fur-
tion 44ADA defines that professionals whose total gross nish an audit report under section 44AB.
receipts do not exceed more than 50 lakh in a financial year
X A short income tax return ITR-4S could be filed instead
can avail the benefit of presumptive income from A.Y. 2016- of long form of ITR-4
17 onwards of presumptive income of any professional claim-
ing benefit under this scheme shall be assumed to be 50%
As per new proviso being added in section 44AD and 44ADA,
of total gross receipts. Remaining 50% will considered as his
If a person opts for presumptive taxation scheme, he has to
expenditure.
remain in it for 5 years. If he does not do the same for any
of the 5 years, he shall not be eligible to claim the benefit
Here professional means legal, Medical, Engineering, Archi-
of scheme for next 5 years. He would be expelled from pre-
tectural profession, profession of accountancy, interior deco- sumptive taxation scheme.
ration and any other notified professions.

Benefits of presumptive taxation
Applicability of presumptive income
This regime is applicable to a resident in India who is an scheme
individual, HUI or partnership firm but not a limited liability The greatest advantage of presumptive income for taxpay-
partnership as it has been specifically excluded from this ers is that they do not need to maintain books of accounts.
section. Small businesses and professions who have merge resources
and do not have enough time, money or energy to dedicate
Can deduction of business expenditure a full time in-house accounting person, can easily avail the
benefit of this scheme. They do not have to pay advance
be availed while using presumptive in-
tax. More income will retain with him to spend. It will help
come scheme? to reduce the complicacy in tax system and give boost to

It is also proposed that if an assessee is applying section 44AD small businesses.
or 44ADA, he won't be allowed to claim any expenses or
depreciation. Any deduction allowed under provision of Benefits to Government
section 30-38 shall be deemed to be given full effect, no Since our Government is wedded with the socialistic pattern
further deduction shall be allowed. of society so it is the utmost duty of government to bring

Statutory Deductions of Section 80
Deduction of section 80C to 80U will be allowed and the
income so computed would be liable to pay tax as per in-
come tax slab rates.

How to opt presumptive taxation
scheme

In a simple manner, assessee only needs to declare his in-
come and compute tax on that income.
X No accounting records are required to be maintained
under section 44AA.

40 | 2017 | MAY | BANKING FINANCE

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