Analysis of Section 44AD and Section 44AE Income Tax Act

Updates and details for Analysis of Section 44AD and Section 44AE Income Tax Act:

From here, you can get the introduction of Section 44AD and Section 44AE, Eligibility Criteria for the Presumptive Taxation Scheme Under Section 44AD and Section 44AE and also  Purpose of Section 44AD. So, just scroll down and read the full article.

Introduction:

The presumptive taxation scheme was introduced by the Income Tax Act as a means through which small taxpayers who perform tasks such as the auditing of accounts as well as maintaining account ledgers would receive some form of relief.

This means that any individual looking to avail of this scheme will be able to declare his or her total taxable income at a predefined rate, while obtaining relief from the cumbersome task of account maintenance and audit. For this purpose, the Income Tax Act has introduced two types of presumptive taxation schemes:

• The presumptive taxation scheme under Section 44AD
• The presumptive taxation scheme under Section 44AE

Eligibility Criteria for the Presumptive Taxation Scheme Under Section 44AD:

The following persons or individuals are eligible to avail of the presumptive taxation scheme under section 44AD

• Any individual who is a resident of India
• Hindu Undivided Families (HUFs) who are residents of India
• A partnership firm that is resident to India

Any of the entities mentioned above can adopt this scheme provided that they have claimed tax deductions for the relevant assessment year under the following sections

• 10A
• 10AA
• 10B
• 10BA
• 80HH
• 80RRB

The following persons or individuals are ineligible to avail of the presumptive taxation scheme under section 44AD

• Any Limited Liability Partnership Firm (LLP)
• Non residents
• Any person who is not an individual, Hindu Undivided Family or a partnership firm

Eligibility Criteria for the Presumptive Taxation Scheme under Section 44AE:

The following persons or individuals are eligible to avail of the presumptive taxation scheme under section 44AE

• Any individual
• A Hindu Undivided Family (HUF)
• A firm
• A company

However, the entities mentioned above can only avail of the provisions under the scheme under the following conditions:

• The individuals in question must be carrying on a business that involves the leasing, renting out or plying of goods carriages
• The individuals in question must not own or possess goods vehicles that exceed 10 in number at any point over the duration of the year.

Purpose of Section 44AD

The basic intention of the Government to widening the scope of Section 44AD of Income Tax Act is to reduce the compliance and administrative burden on small businessmen and relieve them from the requirement of maintaining books of account. Such assessees opting for the presumptive scheme are not required to maintain books of account under section 44AA or get them audited under section 44AB.

Stay tuned with us for more updates and keep browsing our site.