QUERY ABOUT SECTION 44 AD OF INCOME TAX ACT

[KASTURI SETHI]

Dear All Experts,

I want to know about the concept of Section 44AD of Income Tax Act.

(i) What are its advantages and disadvantages ?

(ii) Is Section 44AD applicable to only consultancy income (excluding pension) ?

(iii) Once I opt for Section 44AD, am I legally bound to follow this method for 5 years ?

Thanks a lot in anticipation

AI Summary

Presumptive taxation under Section 44AD sets deemed profit rates, limits expense claims and imposes a five year continuity rule.
Presumptive taxation under Section 44AD requires eligible business taxpayers to declare deemed profits at prescribed turnover rates, disallowing separate expense deductions and relieving regular bookkeeping; once opted it must be applied for five continuous assessment years, with opt out consequences including temporary ineligibility to re enter and possible tax audit exposure. A separate professional presumptive scheme under Section 44ADA prescribes a higher deemed profit rate, different eligibility and allows year wise election without the five year lock in.