Presumptive Tax (44ADA)Handled by experts

Presumptive Taxation Scheme under Section 44ADA of the Income Tax Act 1961 is introduced for professionals with receipts up to INR 50 lakh in a financial year. Under this scheme, the income is computed on a presumptive basis, i.e., a certain percentage of the total receipts is deemed to be the income. For professionals under section 44ADA, 50% of the total receipts is considered as income, and they are required to pay taxes on this amount. This scheme is introduced so that professionals with small income can have a simplified taxation procedure and reduce the compliance burden. It applies to professions such as legal, medical, engineering, architectural services, accountancy, technical consultancy, etc.

The benefit of the Presumptive Taxation Scheme is that it simplifies the process of calculating tax for professionals. Instead of having to maintain detailed books of accounts and get them audited, professionals can calculate their income as 50% of their total receipts and pay tax on that amount. 

However, if a professional believes that his/her income is less than 50% of the receipts, they can choose to maintain detailed books of accounts and get them audited to prove the same. 

Moreover, professionals eligible for the Presumptive Taxation Scheme under section 44ADA are also required to pay the whole amount of their Advance Tax liability by 15th March of the previous year. If they fail to do so, they may be liable for interest under section 234C. 

It's important to note that while the Presumptive Taxation Scheme under section 44ADA simplifies the taxation process for professionals, it does not necessarily reduce their tax liability. Their actual tax liability would depend upon their actual income and the applicable tax rates. Furthermore, professionals opting for this scheme are not allowed to claim any business expense deductions.

DOCUMENTS REQUIRED

• PAN

• Aadhaar

• Bank Statements

• Receipt Summary