Recruitment service- 44AD or 44ADA

[Shrikanth Parmarthy]

A client downloads resumes from job portals like Naukri and matches them with the job requirements provided by a vendor company. If a candidate’s profile aligns with the vendor’s needs, the consultancy firm forwards the resume to the vendor. Upon successful deployment of the candidate and confirmation of their probation period, the vendor company pays the consultancy firm a service fee equivalent to 8.33% of the candidate’s Cost to Company (CTC).

The question is whether this recruitment service model qualifies for presumptive taxation under Section 44AD or Section 44ADA of the Income Tax Act, 1961.

AI Summary

Presumptive taxation under 44AD requires continuous five-year adherence, otherwise the taxpayer loses access to the scheme.
Recruitment consultancies do not qualify as the specified professions under Section 44ADA but may adopt presumptive taxation as business under Section 44AD; a key condition requires continuing presumptive declarations for five consecutive years, with loss of the scheme and five-year ineligibility if the taxpayer abandons the scheme prematurely.