Budget 2016 has come up with various reliefs for the taxpayers from many angles. The reliefs may be in form of enhanced limit of rebate U/s. 87A or increased deduction for house rent U/s. 80GG of the Income Tax Act. In addition to these, a new section 44ADA has been introduced for presumptive taxation for professionals. Earlier the presumptive taxation scheme was restricted to businesses only and professionals were specifically kept away from this scheme. Now, professionals are also awarded with a new section 44ADA for presumptive taxation.
Who can opt for this scheme?
Any Resident Individual, HUF, partnership firm (other than limited liability partnership) having professional income can opt for this scheme. Total gross receipts during a Financial year should be less than Rs. 50 lakhs.
Which professions are covered under this scheme?
All the professions covered under section 44AA of Income-tax Act are also covered here. These professions include legal, medical, engineering, architectural, accounting, technical consultancy or interior decoration and also other notified professions.
Notified professions include profession of film artist like director, actor, cameraman, editor, singer, lyricist, writer etc. and also profession of authorized representative.
What are the implications on audit of books of accounts?
If taxpayer claims a profit of at-least 50% of total gross receipts, then he is not required to maintain books of accounts. But tax audit under Income Tax Act is applicable to taxpayer in following case-
- Taxpayer wants to show profit less than 50% of gross receipts, AND
- His taxable income is more than basic exemption limit.
In such case, books of accounts shall be audited by a Chartered Accountant.
Click here to know more about Audit of business/ profession.
What are the benefits of this scheme?
Earlier, all the professionals as mentioned above have to maintain proper books of accounts for every financial year. Further if the gross receipts were more than Rs. 25 lakhs they were required to get the books of accounts audited. Now, they are free from maintaining books of accounts.
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