New enhanced turnover limit available for section 44AD & 44ADA

New enhanced turnover limit available for sections 44AD & 44ADA

Section 44AD of the Act is also known as a presumptive taxation scheme. This scheme applies to resident individuals, HUF or a partnership firm other than LLP carrying on eligible business and having a turnover or gross receipt of two crore rupees or less. Under this scheme, a sum equal to 8% (of cash receipts) or 6% (of non-cash receipts) is deemed to be the profits and gains from the business. If the assessee has actually earned a higher sum than 8% or 6%, then he must declare the same in the return.

Section 44ADA of the Act is known as a presumptive taxation scheme for small professionals. This scheme applies to resident individuals, HUF or a partnership firm other than LLP carrying on any profession mentioned in sub-section (1) of section 44AA, and whose total gross receipts do not exceed fifty lakh rupees in a previous year. Under this scheme, a sum equal to 50% of the gross receipts is deemed to be the profits and gains from the profession. If the assessee has actually earned a higher sum than 50%, then he must declare the same in the return.

Budget 2023 has made the following changes applicable from FY 2023-24 (AY 2024-25)

The threshold limit for applicability of sec 44AD has been increased from two crore rupees to three crore rupees provided that the amount of cash received during the previous year,  does not exceed five per cent of the total turnover. It is further clarified that. the receipt by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash.

The threshold limit for applicability of sec 44ADA has been increased from fifty lakh rupees to seventy-five lakh rupees provided that the amount of cash received during the previous year,  does not exceed five per cent of the total gross receipts. It is further clarified that. the receipt by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash.