Deeming Income Provisions

[Ramesh Das]

If I am showing income under section 44AD of the Income Tax Act, i.e Income @ 8 % or more of the Gross Receipts, would it matter If the cash withdrawals from the account are insufficient to cover the deemed expenses ? I personally feel that this should not matter as the deeming provisions itself state that books of accounts need not be maintained. Pleas offer your opinions.

[malhar shenoy]

Yes ,  under section 44 AD 8% of the Gross Receipts / Turnover is considered as Income . It is assumed that all the expenses have been met. In other words deemed elegible deduction is given for 92 % of the turnover without refering to any records.

Only requrement is turnover/ Gross receipt should be correct/ True.

AI Summary

Presumptive taxation deeming income: gross receipts treated as deemed income regardless of cash withdrawals, provided turnover is correct. Under the deeming mechanism a fixed proportion of gross receipts under section 44AD is treated as taxable income and the remainder as provision for expenses without reference to actual expenditures or cash flows; insufficient cash withdrawals do not affect the presumptive computation, though reported turnover must be correct.