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.

AI Summary

Understanding Income Assumptions Under Section 44AD: No Need for Detailed Expense Records if Turnover is Accurate A query was raised regarding the implications of showing income under Section 44AD of the Income Tax Act, which assumes income at 8% or more of gross receipts without requiring maintenance of books of accounts. The concern was whether insufficient cash withdrawals to cover deemed expenses would be problematic. A response clarified that under Section 44AD, 8% of the gross receipts is considered as income, assuming all expenses are met, and 92% of the turnover is eligible for deduction without needing records, provided the turnover or gross receipts are accurate.