Under Income tax rule every business has to maintain the book of accounts . Every business is required to pay advance tax. The Presumptive taxation scheme under section 44AD and 44ADA gives a great relief to tax payers, professionals, retailers and small businessmen. It gives liberty from maintaining account book and complex ITR form 4. This scheme is designed to give relief from tax tangle.

Presumptive taxation scheme is available to almost every professional like Legal, Medical, Engineering, Architectural, Accountancy, Technical Consultancy, Interior decoration, Film Artists, Information Technology professional, except few like agency business, hiring or leasing goods carriage, earning income in the nature of commission or brokerage. The businessman and professional who earn decent income can’t enjoy, the government considers that those who earns handsomely, can afford to maintain books and get audited. To enjoy the relief of the presumptive taxation, the annual turn over should not be more than Rs.2 crore. If exceed Rs.2 crore, should go back the section 44AA. The professional can claim presumptive taxation relief from the April 2017.

SECTION 44AD 44ADA

The prescribed rate of estimation for business is the 8%. It means if you have the turnover of 100, you can tell profit of 8. You are not required to go into the actual calculation. The presumptive Assessment rate for professionals is 50%. It means out of 100 earning, 50 is considered as the profit (Bussiness-8%, professional-50%). For business to get the relief of the presumptive taxation, the annual turnover should not be more than Rs. 2 crore. If it exceeds means you should go back the section 44AA. It means you have to maintain the book and get audited. In such cases, have to use the ITR-4 for income efiling. The turnover limit of 2 crore is applicable from financial year 2016-17. If the annual turnover from profession exceeds 50 lacs. As professionals get most of its income as profit, there is a lower limit for the presumptive tax relief. This would be included in the Computation of turnover for the purpose of section 44AD and 44ADA-VAT, Excise Duty, Cess, service tax and other levy, sales of unusable empties and supplies, service charges charged for delivery and which is not included as a part of the total turnover are the advance or deposits received, consideration received on sale of fixed assets cash or other discounts.

If you are carrying on more than one business or profession, the total turn over of all the business should be taken into account. Along with the presumptive taxation scheme, you can also claim tax benefit of deductions under chapter Vl-A. If you are availing the relief of presumptive taxation scheme then you are not required to pay advance tax every year quarter, rather you have to pay tax before 15 march of every financial year. The business or professional income become part of your total income. The income tax slab rate of individual would be applicable in this case and should ITR-4S file income tax return using the form ITR- 4S.