Understanding the Special Provisions of Presumptive Taxation Scheme

Description Discover the complete guide on Understanding the Special Provisions of Presumtive Taxation Scheme, covering historical background, Indian experience, provisions under the Income Tax Act, and special schemes like Sections 44AD, 44ADA, and 44AE. Explore computation, eligibility, FAQs, and important CBDT circulars. Save 20% on “Presumptive Taxation: A Comprehensive Guide,” ISBN 9789356036574,  April, 2024 Edition, authored by Ram Dutt Sharma, comprising 264 pages, published by Commercial Law Publishers. Contents Pages Chapter 1. Introduction Historical Background 1 Objectives of presumptive taxation 2 What is Presumptive Taxation 3 Some examples of the kind of taxpayers to whom the scheme of Presumptive Taxation applies 3 Non-Applicability of Scheme of Presumptive Taxation 4 Section dealing with presumptive taxation schemes 4 Chapter 2. Indian Experience of Presumptive and Estimated Taxation Overview of Presumptive and Estimated Taxation 6 Recommendations of Tax Reforms Committee 7 Elements of Presumption or Estimation in the Indian Income Tax Act 8 Chapter 3. Presumptive Income Taxation under the Indian Income Tax Act Provisions Relating to non-residents and Foreign Companies 10 Provisions Relating to Indian Residents 11 Chapter 4. Special Provision for Computing Profits and Gains from the Business of Trading in Certain Goods [Section 44AC] Memorandum Explaining the Provisions in Finance Bill 1988 14 Chapter 5. Presumptive Computation of Profits for Taxation for Business [Section 44AD] 20 Special Provision for Computing Profits and Gains of Business on Presumptive Basis 20 Eligible assessee to take advantage of the presumptive taxation scheme of section 44AD [Explanation (a) of Section 44AD(1)] 25 Eligible business [Explanation (b) of Section 44AD(1)] 25 Total Turnover or Gross Receipts 26 Suggested Records can be Maintained to Calculate Total Turnover or Gross Receipts 26 Computation of Taxable Income Presumptive Taxation Scheme of Section 44AD 27 Meaning of Total Turnover or Gross Receipts 28 Advance and Retention Money: 30 Chapter 6. Special Provision for Computing Profits and Gains of Profession on Presumptive Basis [Section 44ADA] Introduction of Presumptive taxation scheme for persons having income from profession 83 Which professional assessees are eligible to opt for the section 44ADA? 85 Meaning of “Profession” 85 What compliances are required if assessee opts for section 44ADA? 86 A eligible person whose total gross receipts for the year exceed Rs. 50,00,000 cannot adopt the presumptive taxation scheme of  section 44ADA 86 If the amount of cash received during the previous year does not exceed 5% of the total gross receipt, then the threshold limit for total gross receipt shall be taken as Rs. 75,00,000 instead of Rs. 50,00,000 [First Proviso to Section 44ADA(1)] 86 Eligible person who can take advantage of the presumptive taxation scheme of section 44ADA [Section 44ADA(1)] 87 Not to claim any deductions under sections 30 to 38 of the Income Tax Act [Section 44ADA(2)] Provisions to be applied if a person does not opt for the presumptive taxation scheme of section 44ADA and declares his income from 89 Who is required to maintain books of accounts as per Section 44AA? 89 Who is required to get books of accounts audited ? 90 Applicability of tax audit under section 44AB to persons carrying on professions 90 Assessee can opt in and opt out of Section 44ADA 91 Frequently Asked Questions (FAQ) 91 Chapter 7. Special Provision for Computing Profits and Gains of Business of Plying, Hiring or Leasing Goods Carriages [Section 44AE] Eligible Assessee 102 Eligible Business 103 Section 44AE operates on the basis of “ownership” and not on the basis of “usage”. 103 Applicability [With effect from Assessment year 2019-20 and subsequent years] 104 Applicability [From Assessment year 2015-16 to 2018-19] 104 Applicability [From Assessment year 2011-12 to 2014-15] 104 Applicability [From Assessment year 2003-04 to 2010-11] 105 Applicability [From Assessment year 1998-99 to 2002-03] 105 Applicability [From Assessment year 1994-95 to 1997-98] 105 Chapter 8. Special Provisions for Computing Profits and Gains of Retail Business [Section 44AF] Introduction of special provision for computing profits and gains of retail trades 134 To whom applicable 136 ‘Retail trade’ meaning of 136 Chapter 9. Special Provision for Computing Profits and Gains of Shipping Business in the case of Non-Residents [Section 44B] Applicable to 143 Deemed Income 143 Chapter 10. Business of Providing Services and Facilities in connection with Exploration etc. of Mineral Oils [Section 44BB] Purpose of Section 44BB 154 Section 44BB applicable to Non Resident 155 Non-Applicability of Section 44BB [Proviso to Section 44BB(1)] 155 Deemed Income = 10% [Section 44BB(2)] 156 Assessee may claim lower profits, but he has to maintain such books of accounts and get them audited by a CA and his case shall be decided under section 143(3) of the Act [Section 44BB(3)] 156 No set off of unabsorbed depreciation and brought forward loss shall be allowed if Income declared under presumptive schemes under section 44BB [Section 44BB(4)] 156 When assessee is required to get books of accounts audited? 157 Chapter 11. Special Provision for Computing Profits and Gains of the Business of Operation of Aircraft in the case of Non-Residents [Section 44BBA] Simplification in the computation of income in respect of foreign airlines 176 Applicable to Aircraft business of Non Resident 177 Income Taxable under section 44BBA 177 Businesses covered by section 44BBA exempt from tax audit 179 Chapter 12. Special Provision for Computing Profits and Gains of Foreign Companies engaged in the Business of Civil Construction, etc., in Certain Turnkey Power Projects [Section 44BBB] Turnkey Contract/Project 183 Foreign company engaged in the business of civil construction [Section 44BBB(1)] 183 Option to claim profit lower than the deemed profits under Section 44BBB [Section 44BBB(2)] 184 No set off of unabsorbed depreciation and brought forward loss shall be allowed if Income declared under presumptive scheme under section 44BBB [Section 44BBB(3)] 184 Nature of Business 184 Eligible Assessee 184 Presumptive income 185 Chapter 13. Deduction of Head Office Expenditure in the case of Non-Residents [Section 44C] Restriction on Deduction of Head Office Expenses (Section 44C) 193 Purpose of section 44C 194 Applicability of Section 44C 194 Ceiling limit in respect of head office expenses in the case of non-residents [Section 44C] 194 Meaning of Adjusted Total Income [Explanation (i) to Section 44C] 195 Meaning of Head Office Expenditure [Explanation (iv) to Section 44C] 197 Quantum of Head Officer expenses allowable 197 Chapter 14. Special Provisions for Computing Income by way of Royalties, etc., in the Case of Foreign Companies [Section 44D] Summary of Taxability Rules 210 Chapter 15. Special Provisions Relating to Retail Trade, etc. [Chapter XII-C : Sections 115K to 115N] Filing of return – Not required 229 Deemed Income 230 Deductions under Sections 80C to 80U, 88 and 88B not to be allowed 230 Tax Calculation 230 Text of Chapter XII-C : Section 115K to 115N 231 [Special provisions relating to retail trade, etc.] 231 115L. Return of income not to be filed in certain cases. – 232 115M. Special provision for disallowance of deductions and rebate of income-tax. – 232 115N. Bar of proceedings in certain cases. – 233 Form of statement to be furnished under section115K. 233 Chapter 16. Presumptive Taxation Scheme & Requirement of Maintaining Books of Accounts as per Section 44AA Who is required to maintain books of accounts as per Section 44AA? 234 Chapter 17. Presumptive Taxation Scheme & Applicability of Tax Audit under Section 44AB What is a Tax Audit? 237 Form in which the tax audit report has to be obtained 237 Requirements of getting books of accounts audited 238 Calculation of Gross receipt or Sales turnover for a tax audit 239 Chapter 18. Frequently Asked Questions (FAQ) 246 Chapter 19. Important CBDT Circulars/ Instructions/Press Release Tax audit threshold of Rs 2 crores only applicable to taxpayers opting for presumptive tax scheme [CBDT’s Press Release, Dated 20.06.2016] 249 CBDT Instruction No – 2/2008, Dated: 22.02.2008 [F.No.153/7/2007- TPL(Pt 1)] ‘Benign Assessment Procedure’ for assessees engaged in diamond manufacturing and/or trading. 249