Re: General Trading Chat
Posting below extract from Govt's own advance clarifications :
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7. Can an assessee adopting the presumptive taxation scheme as provided in section 44AD
declare lower income?
If the actual income from the business covered under section 44AD is lower than the income
prescribed under the presumptive scheme, then the assessee can declare income from aforesaid
business at a lower rate (i.e., at less than 8%).If the assessee does so,i.e.
declares lower income and his actual income exceeds the maximum
amount which is not chargeable to tax, then the relief from maintenance of books of account is
not available and he is required to maintain the books of account as per section 44AA and
further, he has to get such books of account audited as per section 44AB.
Illustration
Mr. Sashank is running a stationary mart. The turnover of the business during the previous year
2012-13 is Rs. 84,48,252. His actual income from this business is only Rs. 5,52,848 which is
less than Rs. 6,75,860 (i.e.,Rs. 84,48,252 * 8%). In this case can he declare actual income
which is lower than the limit prescribed under section 44AD?
**
As per the provisions of section 44AD, if the actual income from the business covered under
section 44AD is lower than the income prescribed under the presumptive scheme, then the
assessee can declare income from aforesaid business at a lower rate (i.e., at less than 8%).
Thus, in this case Mr. Sashank can declare lower income. However, in this case he has to
maintain the books of account prescribed under section 44AA and has to get such books of
account audited as his actual income exceeds the exemption limit (i.e.,Rs. 2,00,000).
Smart_trade