Sec 44 AD and Sec 43C
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This document outlines the provisions for computing income on an estimated basis for certain businesses and taxpayers under section 44AD of the Income Tax Act. It provides that eligible taxpayers engaged in eligible businesses with annual turnover less than Rs. 1 crore can opt to pay tax on estimated income of 8% of their gross receipts. All deductions are deemed allowed. Taxpayers can declare a higher income but must maintain books of accounts if total income exceeds exemption limits.
![ An assesse opting for the above scheme shall be exempted
from payment of advance tax related to such business
An assesse opting for the above scheme shall be exempted
from maintenance of books of a/c related to such business as
required u/s 44AA
An individual/HUF opting for the above scheme can submit
his/it return of income [*]-45’(which is simplified return
form)](https://image.slidesharecdn.com/sec44ad-160220064235/85/Sec-44-AD-and-Sec-43C-6-320.jpg)
Sec 44 AD and Sec 43C
- 1. COMPUTATION OF INCOME ON ESTIMATED BASIS IN THE CASE OF TAXPAYERS ENGAGED IN CERTAIN BUSINESS
- 2. The provision of section 44AD are given below------ ELIGIBLE ASSESSEE – the assessee should be an eligible assesse. Eligible assessee for this purpose is a Residential Individual , a Resident Hindu Undivided Family or a Resident Partnership Firm HAS NOT CLAIMED ANY OTHER DEDUCTION u/s 10A 10AA 10BA 80HH to 80RRB in the relevant assessment year ELIGIBLE BUSINESS – the assesse should be engaged in any business (whether it is retail Or wholesale trading or civil construction or any other business).
- 3. However, the following persons are not eligible to avail benefit u/s 44AD A person carrying on profession referred to in section 44AA(1) A person earning income in the nature of commission or brokerage A person carrying on any agency business A person who is in the business of plying, hiring or leasing goods carriage TURNOVER – total turnover/gross receipt in the PY of the eligible business should not exceed Rs 1 crore
- 4. If the above are satisfied , the income from the eligible business is estimated at 8% of the gross receipt or turnover
- 5. The assesse can voluntarily declare a higher income in his return All deductions under sections 30 to 38 , including depreciation and unabsorbed depreciation or deemed to have been already allowed and no further deduction is allowed under these section. However in the case of firm, the normal deduction in the respect of salary and interest to partners u/s 40(b)shall be allowed . The written down value is calculated , where necessary, as if depreciation as applicable has been allowed. Moreover , it will be assumed that disallowance, if any u/s 40, 40A, and 43B has been considered while calculating the estimated income @8 %
- 6. An assesse opting for the above scheme shall be exempted from payment of advance tax related to such business An assesse opting for the above scheme shall be exempted from maintenance of books of a/c related to such business as required u/s 44AA An individual/HUF opting for the above scheme can submit his/it return of income [*]-45’(which is simplified return form)
- 7. A tax payer can declare his income to be lower than the deemed profits and gains as stated above. The following consequences are applicable if the taxpayer declares his income which is lower than the deemed profit and gains as stated above The taxpayer has to maintain the books of account as per as section 44AA(irrespective of income or taxpayer)if his total income exceeds the exemption limit The taxpayer has to get his book of account audited under section 44AB (irrespective of turnover) if his total income exceeds over exemption limit
- 8. Section 43C deals with Special provision for computation of cost of acquisition of certain assets. Section 43C is applicable in following two Cases :-- Amalgamation Transfer under gifts, will etc
- 9. For a merger to qualify as an amalgamation for the purpose of income tax act. It has to satisfy the following conditions All the properties of the amalgamating company immediately before the amalgamation should become the property of the amalgamated company by virtue of the amalgamation All liabilities of the amalgamating company immediately before the amalgamation should become the liabilities of the amalgamated company by virtue of the amalgamation Shareholders holding not less than 3/4th of the shares in amalgamating company (other than shares already held by the amalgamated company or by its nominee) should become share holders of the amalgamated company by virtue of amalgamation
- 10. Where an amalgamating company transfer a capital assert as stock in trade to the amalgamated company and such stock is in trade is sold by amalgamating company then the cost of acquisition of stock in trade shall be the aggregate of the following Cost of acquisition of the said asset to the amalgamating Expenditure on improvement of the said asset incurred by the amalgamating company and amalgamated company Expenditure incurred wholly and exclusively in connection with the amalgamating company
- 11. Where a capital asset is transferred as stock in trade under a gift, will, irrevocable trust or on partition of HUF and such stock in trade is sold, then the cost of acquisition in stock and trade shall be aggregated of the following Cost of acquisition of the said asset to the transferor Expenditure on improvement of the said asset incurred by transferor and transferee Expenditure incurred wholly and exclusively in connection with the transfer by the transferor including any gift tax, probate fees, expenditure incurred to effect the partition of HUF or to create a trust
- 12. Thank You