You are here
What is Section 44AD Persumtive Income of Business?
- It is special scheme for small business(Resident Individual/Partnership/Huf) whose turnover is up to 1 Crore 2 crore
- These business need not maintain any books of accounts nor get their accounts audited
- In their case 8% of turnover is deemed to be their PGBP Income (8% is the Minimum Amount,Assessee can show higher amount also)
New Amendment
If amount received directly in bank account then 6%
is deemed to be their PGBP Income
EarlierIf Turnover of Business upto 1 Crore,then 8 % of Turnover is Profit
No need to make books of accounts
No need to do Audit
Now FY 2016-17 (AY 2017-18)
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
Important points
- No deduction of any expenses under section 30 to 38.is allowed .
- If the assesse feels that his profit is less than 8% of turnover then he has to compulsory maintain books of accounts and get the accounts audited under Section 44AB.
- This scheme is NOT for Specified Professions like Accountant/Interior Designers/Film artists/IT Professionals/Company Secretary/Doctor/CA/CS etc
Question 1
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 |
| Cash SALES | 1000000 | 5000000 | 8000000 | 12000000 |
| Less | ||||
| Expenses | 800000 | 4800000 | 8100000 | 9000000 |
| Profit/loss | 200000 | 200000 | -100000 | 3000000 |
View Answer
| Particulars | Case 1 | Case 2 | Case 3 | Case 4 |
| Cash Turnover | 1000000 | 5000000 | 8000000 | 12000000 |
| PGBP @ 8% of Turnover | 80000 | 400000 | 640000 | Not Applicable |
Question 2
Can in Case 1,assessee show PGBP income of 200000 in ITR ?
View AnswerYes,assessee can show PGBP income more than or equal to 8%
Question 3
Can in Case 2,assessee show PGBP income of 200000 in ITR ?
View Answer
Yes, but he has to compulsory maintain books of accounts and get the accounts audited under Section 44AB.
Question 4
Can in Case 3,assessee show loss of 100000 in ITR ?
View AnswerYes, but he has to compulsory maintain books of accounts and get the accounts audited under Section 44AB.
Other Points
- Assessee cannot claim deductions under Section 30 to 38. But they can claim other deduction like Chapter VIA Deduction (Section 80C) etc. or section 40 (b) Deduction for partners.
- In case,they sell their assets,Capital Gains will be computed assuming Depreciation has been charged on Assets
NON APPLICABILITY
1.Specified Professions u/s 44AA
like Accountant/Interior Designers/Film artists/IT Professionals/Company Secretary/Doctor etc)
2 Persons Claiming Certain Deductions u/s 80IA to 80 RRB
3..Section 44AE Business
(Business of Plying ,hiring,leasing Goods Carriages)
4.Companies/LLP
5.When Turnover >1 Cr
6.All Non Residents
