Section 44 ad and its Implications

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Section 44 AD and its implications
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It is trivial to ask for questions like how to
apply for PAN and TAN when there are new taxation
schemes from the Income tax department defining
new guidelines for the common man and for
businesses who are always looking for saving
their income and minimizing their
expenses. Section 44AD of income tax act is one
of them, lets have a look. Meaning of
presumptive taxation scheme A person who is
engaged in business or profession is required to
maintain regular books of account and further, he
has to get his accounts audited as per the
Income-tax Act. To give relief to small taxpayers
from this tedious work, the Income-tax Act has
framed the presumptive taxation scheme under
sections 44AD. By being relieved from tedious
job of maintenance of books of account and also
from getting the accounts audited, a person
adopting the presumptive taxation scheme can
declare income at a prescribed rate.
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Eligibility for the presumptive taxation scheme
of section 44AD in India This scheme of section
44AD under income tax act is designed to give
relief to small taxpayers engaged in any business
in India (except some businesses referred to in
section 44AE). The scheme can be adopted by
following persons in India Resident
Individual Resident Hindu Undivided
Family Resident Partnership Firm (not Limited
Liability Partnership Firm) The scheme cannot be
adopted by a non-resident and by any person other
than an individual, a HUF or a partnership firm
(not Limited Liability Partnership Firm) in other
words. This scheme cannot be adopted by a person
who has made any claim towards deductions under
section 10A/10AA/10B/10BA or under sections
801111 to 80RRB in the relevant year
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• The following Businesses are not covered under
  section 44AD of income tax act in India
• Except the following businesses, the scheme of
  section 44AD is designed to give relief to small
  taxpayers engaged in any business
• In reference to section 44AE Business of
  plying, hiring or leasing of goods carriages.
• Any person engaged in any agency business, small
  or big.
• Any person who is earning income in the nature of
  commission or brokerage
• Presumptive income means the income which is
  calculated on the presumptive basis in general
  terms. Assesse has to pay tax on the basis of his
  presumptive income only, it is different from the
  actual income. To reduce the burden of
  maintaining books of accounts by the small
  assesse, the concept of presumptive income tax
  can be really effective.