Important Section of Income Tax For Businesses and Professionals
1) Section 44AA :-
=> Compulsory For Maintenance Of Books Of Accounts (In Three Cases)
i) In Case Of Specified/ Notified Profession:-
- If gross receipt is more than 1.5 lakh.
- In all 3 years preceding the previous year or likely to exceed if the profession is newly setup then, assessee is required to maintain books of accounts as per Rule 6F, otherwise he is required to maintain to such books of accounts or documents from which AO is able to complete the assessment.
ii) In Case Of Other Assessee (Business) :-
- If profit/ gain is more than 1.2 lakhs or total sales/ gross
receipt is more than 10 lakh.
- In all 3 years preceding the previous year or likely to exceed if the profession is newly setup then, assessee is required to maintain any books of accounts or documents from which AO is able to complete the assessment otherwise the assessee is not required to maintain any books of accounts.
iii) In Case Of Individual & HUF :-
- If profit/ gain is more than 2.5 lakhs or total sales/ gross
receipt is more than 25 lakhs.
Note: If the assessee fails to maintain books of accounts as per section 44AA then penalty of ₹ 25,000/-, as per Section 271A.
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2) Section 44AB :-
=> Compulsory For Audit Of Books Of A/c's (In Four Cases)
i) In case of Business :-
- If Turnover is more than ₹ 1 crore during the previous year.
ii) In case of Profession :-
- If Gross receipt is more than ₹ 50 lakhs during the previous year.
iii) In case of assessee covered by Section 44AD or Section 44ADA :-
- If Assessee claimd income less than profit/ gain deemed under those section.
Note: Due Date 30-sept. of Assessment Year. and If the assessee fails to accounts audit as per section 44AB then penalty of 0.5% of Turnover or Gross receipt or ₹ 1,50,000/-, whichever is lower, as per Section 271B.
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• In this section not required to maintain books of a/c's & audit.
• Calculate Profit & Gain of Business on Presumptive Basis :-
- 6% of gross receipt/ turnover (if payment/ receipts realized through bank).
- 8% of gross receipt/ turnover (if payment/ receipts realized through cash).
• Applicability :-
- If Turnover/ Gross Receipt is up to ₹ 2 Crores.
- Resident Individual
- Resident HUF
- Resident Firm (Excluding LLP)
- Who hasn't claimed deduction U/S 10AA or 80IA to 80RRB
- Businesses (Except - Sec. 44AE Business, Agency Business, Commission & Brokerage Business)
• Notes:-
a) The eligible assesses is required to pay advance tax. However, there will be only one installment i.e. 15th march of financial year.
b) If section 44AD is applied then deduction of expenditure u/s 30 to 38 shall not be allowed (assume it's deemed to be already allowed).
c) Partners remuneration, salary, interest etc. as per sec.40(b) shall not be deductible while computing income under sec. 44AD.
d) If assessee declares income for any P.Y. as per 44AD & he doesn't declare income as per 44AD for 5 years subsequent to the year in which assessee not declare income as per sec. 44AD.
e) If point (d) is applicable & NTI of assessee is more than basic exemption then assessee is required to maintain books of a/c's.
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• In this section not required to maintain books of a/c's & audit.
• Calculate Profit & Gain of Business on Presumptive Basis, 50% of gross receipt.
• Applicability :-
- If Gross Receipt is up to ₹ 50 Lakhs.
- Resident Professionals as per U/S 44AA.
• Notes:-
a) The eligible assesses is required to pay advance tax by 15th march of financial year.
b) Deduction of expense u/s 30 to 38 shall not be allowed.
c) Partners remuneration, salary, interest etc. as per sec.40(b) shall not be deductible while computing income under sec. 44ADA.
d) If assessee declare income lower than 50% & his NTI is more than basic exemption he is required to maintain books of A/c's.
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• Applicability :-
- If assessee engaged in the business of plying, hiring leasing such goods carriage.
- If asessee owns up to 10 vehicles.
• Calculate Profit & Gain of Transporters on Presumptive Basis :-
- Heavy goods vehicle: ₹ 1,000 per ton of gross vehicle weight or unladen weight.
- Small vehicle: ₹ 7,500 for every month or part of a month.
• Notes:-
a) Heavy goods vehicle means any goods carriage, the gross vehicle weight of which exceeds 12,000 Kg (12 tons).
b) If assessee owns more than 10 vehicles at any time during the P.Y. then this section shall not apply.
c) Partners remuneration, salary, interest etc. as per sec.40(b) shall be deductible while computing income under sec. 44AE.
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