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

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.