Section 44AD - Special provisions for computing profits and gains of business on presumptive basis

Presumptive Taxation under Section 44AD: Eligibility, Income Calculation, and Compliance Rules Explained

Section 44AD provides a presumptive taxation scheme for computing business profits for resident individuals, HUFs, and partnership firms, excluding LLPs, companies, and certain specified businesses. Eligible businesses must have turnover or gross receipts not exceeding two crore rupees, extended to three crore if cash receipts do not exceed 5% of total turnover. Presumptive income is calculated at 8% of total turnover or 6% if receipts are through specified banking channels. No further deductions under sections 30 to 38 or for partner remuneration are allowed. Failure to declare profits under this scheme for any of five consecutive assessment years disqualifies the assessee from claiming its benefit for the next five years. Advance tax must be paid by March 15 of the financial year. Assessees opting for this scheme are exempt from maintaining books of account and audit requirements under sections 44AA and 44AB unless disqualified by non-compliance.