April 27, 2023

Introduction Are you looking to understand about Decoding the Presumption as to Assets and Books of Account under Section 292C of Income Tax Act 1961 ?  This detailed article will tell you all about Decoding the Presumption as to Assets and Books of Account under Section 292C of Income Tax Act 1961. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. B K Goyal & Co LLP is a CA Firm in India practicing in the field of taxation, company compliance, company incorporations, auditing, tax advisory, planning, business advisory, income tax return filings and many more. The Indian taxation system is a complex and extensive one, with numerous laws, regulations, and provisions. One such provision that often confuses taxpayers is the Presumption as to assets, books of account, etc section 292C of Income Tax Act 1961. This provision empowers the Income Tax Department to make assumptions about the undisclosed assets and income of a taxpayer. In this blog, we will discuss this provision in detail and clarify its applicability. What is the Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961? Section 292C of the Income Tax Act 1961 deals with the Presumption as to Assets, Books of Account, etc. It provides that in any proceeding under the Income Tax Act, if a person is found to be in possession of any money, bullion, jewellery, or other valuable article or thing, which is not recorded in the books of account maintained by him, it shall be presumed that such money, bullion, jewellery, or other valuable article or thing represents the income or property that has not been disclosed for taxation purposes. Applicability of Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 The Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 is applicable in the following cases: Search and seizure operations: If a search and seizure operation is conducted by the Income Tax Department, and any undisclosed assets or income are found, the Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 applies. Survey operations: If a survey operation is conducted by the Income Tax Department, and any undisclosed assets or income are found, the Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 applies. Reassessment proceedings: If the Income Tax Department has initiated reassessment proceedings against a taxpayer, and any undisclosed assets or income are found, the Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 applies. Implications of Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 The Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 has significant implications on taxpayers. Some of them are: Burden of proof: The provision shifts the burden of proof to the taxpayer to show that the undisclosed assets or income found do not represent their undisclosed income or property. The taxpayer must prove that the assets or income found have been disclosed in their books of accounts. Penalty: If the Income Tax Department presumes that the undisclosed assets or income found represent the undisclosed income or property of the taxpayer, they may levy a penalty on the taxpayer for concealing income or assets. Prosecution: If the Income Tax Department presumes that the undisclosed assets or income found represent the undisclosed income or property of the taxpayer, they may initiate criminal proceedings against the taxpayer. FAQs Q. Can the Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 be challenged? A. Yes, the taxpayer can challenge the presumption in court by providing evidence to show that the undisclosed assets or income found do not represent their undisclosed income or property. Q. What if the taxpayer is unable to provide evidence to rebut the presumption? A. If the taxpayer is unable to provide evidence to rebut the presumption, the Income Tax Department may levy a penalty on the taxpayer for concealing income or assets, or initiate criminal proceedings against them. Q. Can the Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 be applied in any other situations apart from search and seizure operations, survey operations, and reassessment proceedings? A. No, the provision is only applicable in the situations mentioned above. Q. How can taxpayers avoid the implications of Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961? A. Taxpayers can avoid the implications of the provision by maintaining proper books of accounts and disclosing all their income and assets. They should ensure that all transactions are recorded in their books of accounts, and they should keep proper documentation for all their assets. Conclusion The Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 is a powerful provision that empowers the Income Tax Department to make assumptions about the undisclosed assets and income of a taxpayer. Taxpayers must be aware of the provision’s applicability and its implications. They should maintain proper books of accounts and disclose all their income and assets to avoid any adverse consequences. The provision also serves as a deterrent to taxpayers who may be tempted to conceal their income or assets. In conclusion, the Presumption as to Assets, Books of Account, etc Section 292C of Income Tax Act 1961 is an essential provision that ensures that taxpayers comply with the tax laws and pay their fair share of taxes. Section 292C, of Income Tax Act, 1961 Section 292C, of Income Tax Act, 1961 states that (1) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is

Introduction Are you looking to understand about Simplifying the Special Provision for Computing Profits and Gains of Business on Presumptive Basis Section 44AD of Income Tax Act 1961 ?  This detailed article will tell you all about Simplifying the Special Provision for Computing Profits and Gains of Business on Presumptive Basis Section 44AD of Income Tax Act 1961. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. B K Goyal & Co LLP is a CA Firm in India practicing in the field of taxation, company compliance, company incorporations, auditing, tax advisory, planning, business advisory, income tax return filings and many more. The Income Tax Act 1961 is the backbone of the taxation system in India. It lays down the rules and regulations for computing the income tax payable by individuals, companies, and other entities. One of the sections of the Income Tax Act 1961 that is of great significance for small businesses is Section 44AD. Section 44AD provides a special provision for computing profits and gains of business on a presumptive basis. This provision is applicable to certain eligible taxpayers who are engaged in certain specified businesses. The objective of this provision is to provide relief to small businesses from the burden of maintaining detailed books of accounts and getting them audited. In this blog, we will simplify the special provision for computing profits and gains of business on a presumptive basis Section 44AD of the Income Tax Act 1961 and explain its various aspects. Eligibility Criteria for Section 44AD To avail of the benefits of Section 44AD, a taxpayer must satisfy the following conditions: The taxpayer must be an individual, Hindu Undivided Family (HUF), or a partnership firm. Companies and Limited Liability Partnerships (LLPs) are not eligible for this provision. The taxpayer must be engaged in any eligible business. The eligible businesses are those that have a turnover of less than Rs. 2 crores. These businesses include: Civil construction Carriage of goods by any mode other than railways Retail business Restaurant business Professionals such as doctors, lawyers, architects, engineers, and accountants Presumptive Income under Section 44AD The presumptive income under Section 44AD is calculated as a percentage of the total turnover or gross receipts of the eligible business. The percentage of presumptive income varies based on the type of business. The following table shows the percentage of presumptive income for different types of businesses: Business Type Presumptive Income Percentage Civil construction 8% Carriage of goods 8% Retail business 6% Restaurant business 6% Professionals 50% For example, if a retail business has a total turnover of Rs. 50 lakhs, the presumptive income under Section 44AD will be Rs. 3 lakhs (6% of Rs. 50 lakhs). Advantages of Section 44AD Section 44AD provides several advantages to small businesses. Some of these advantages are: No need to maintain detailed books of accounts: Under Section 44AD, eligible taxpayers are not required to maintain detailed books of accounts. They only need to maintain a record of their gross receipts or turnover and any other expenditure related to the business. Relief from tax audit: Eligible taxpayers under Section 44AD are also not required to get their accounts audited. This provides relief to small businesses from the burden of getting their accounts audited and the associated costs. Lower tax liability: The presumptive income calculated under Section 44AD is generally lower than the actual income earned by the business. This results in lower tax liability for eligible taxpayers. Disadvantages of Section 44AD While Section 44AD provides several advantages, it also has some disadvantages Disadvantages of Section 44AD Some of the disadvantages of Section 44AD are: Higher tax liability for certain businesses: The presumptive income percentage under Section 44AD for professionals is 50%. This may result in higher tax liability for professionals as compared to the actual income earned by them. Limited eligibility: Section 44AD is applicable only to certain eligible businesses with a turnover of less than Rs. 2 crores. Businesses with a turnover of more than Rs. 2 crores are not eligible for this provision. No deduction for expenses: The presumptive income under Section 44AD is calculated as a percentage of the total turnover or gross receipts. This does not take into account the actual expenses incurred by the business. Therefore, eligible taxpayers cannot claim any deduction for expenses while calculating their income tax liability. FAQs Can a company or an LLP avail of the benefits of Section 44AD? No, only individuals, HUFs, and partnership firms are eligible for the benefits of Section 44AD. Companies and LLPs are not eligible for this provision. What is the presumptive income percentage for civil construction and carriage of goods businesses? The presumptive income percentage for civil construction and carriage of goods businesses is 8%. Are eligible taxpayers under Section 44AD required to maintain detailed books of accounts? No, eligible taxpayers under Section 44AD are not required to maintain detailed books of accounts. They only need to maintain a record of their gross receipts or turnover and any other expenditure related to the business. Can eligible taxpayers claim any deduction for expenses while calculating their income tax liability under Section 44AD? No, eligible taxpayers cannot claim any deduction for expenses while calculating their income tax liability under Section 44AD. The presumptive income is calculated as a percentage of the total turnover or gross receipts and does not take into account the actual expenses incurred by the business. Conclusion Section 44AD of the Income Tax Act 1961 provides a special provision for computing profits and gains of business on a presumptive basis. This provision is applicable to certain eligible taxpayers who are engaged in certain specified businesses with a turnover of less than Rs. 2 crores. The objective of this provision is to provide relief to small businesses from the burden of maintaining detailed books of accounts and getting

Introduction Are you looking to understand about Understanding the Special Provision for Computing Profits and Gains of Profession on Presumptive Basis Section 44ADA of Income Tax Act 1961 ?  This detailed article will tell you all about Understanding the Special Provision for Computing Profits and Gains of Profession on Presumptive Basis Section 44ADA of Income Tax Act 1961. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. B K Goyal & Co LLP is a CA Firm in India practicing in the field of taxation, company compliance, company incorporations, auditing, tax advisory, planning, business advisory, income tax return filings and many more. As a professional in India, it is important to understand the tax laws that apply to your profession. One such provision is Section 44ADA of the Income Tax Act 1961, which provides for the presumptive taxation of certain professions. This section was introduced in the Finance Act 2016 and came into effect from the assessment year 2017-18. The special provision for computing profits and gains of profession on presumptive basis Section 44ADA of Income Tax Act 1961 is applicable to individuals, Hindu undivided families (HUFs), and partnerships who are engaged in certain professions. The purpose of this provision is to simplify the tax compliance process for small taxpayers and reduce the burden of maintaining detailed books of accounts. In this article, we will explore the key features of Section 44ADA, its applicability, and the tax implications for professionals. Applicability of Section 44ADA Section 44ADA applies to professionals who are engaged in the following professions: Legal Medical Engineering Architectural Accountancy Technical consultancy Interior decoration Any other profession as notified by the Central Government It is important to note that the gross receipts of the profession should not exceed Rs. 50 lakhs in a financial year for this provision to be applicable. Computation of Income Under Section 44ADA, the income of the professional is presumed to be 50% of the gross receipts of the profession. In other words, if the gross receipts of the profession are Rs. 30 lakhs in a financial year, the income of the professional will be presumed to be Rs. 15 lakhs (50% of Rs. 30 lakhs). The income computed under this section is deemed to be the total income of the professional for the purpose of income tax. Therefore, the professional is not required to maintain detailed books of accounts and can file a simplified income tax return. Tax Implications Professionals who opt for the presumptive taxation scheme under Section 44ADA are required to pay tax on the presumed income at the applicable tax rate. As of the assessment year 2022-23, the tax rates for individuals and HUFs are as follows: Up to Rs. 2.5 lakhs – Nil Rs. 2.5 lakhs to Rs. 5 lakhs – 5% Rs. 5 lakhs to Rs. 7.5 lakhs – 10% Rs. 7.5 lakhs to Rs. 10 lakhs – 15% Rs. 10 lakhs to Rs. 12.5 lakhs – 20% Rs. 12.5 lakhs to Rs. 15 lakhs – 25% Above Rs. 15 lakhs – 30% In addition to the income tax, professionals are also required to pay a health and education cess of 4% on the tax payable. FAQs Q. Can professionals opt out of the presumptive taxation scheme under Section 44ADA? A. Yes, professionals can opt out of the scheme and maintain detailed books of accounts to compute their income. Q. Can professionals claim deductions under Section 80C? A. Yes, professionals can claim deductions under Section 80C up to Rs. 1.5 lakhs for investments in specified instruments such as Public Provident Fund (PPF), Equity-Linked Saving Scheme (ELSS), and National Pension System (NPS), among others. Q. Can professionals claim business expenses under Section 44ADA? A. No, professionals cannot claim any deductions for business expenses under Section 44ADA. The income is presumed to be 50% of the gross receipts of the profession, and no deductions are allowed for expenses incurred in the course of the profession. Q. Is it mandatory for professionals to opt for the presumptive taxation scheme under Section 44ADA? A. No, it is not mandatory for professionals to opt for the scheme. They can choose to maintain detailed books of accounts and compute their income as per the regular provisions of the Income Tax Act. Conclusion In conclusion, Section 44ADA of the Income Tax Act 1961 provides for a simplified tax compliance process for professionals whose gross receipts do not exceed Rs. 50 lakhs in a financial year. The income of the professional is presumed to be 50% of the gross receipts, and no deductions are allowed for expenses incurred in the course of the profession. While the presumptive taxation scheme can simplify tax compliance for small taxpayers, it is important for professionals to evaluate their tax liability and assess whether it is beneficial to opt for the scheme or maintain detailed books of accounts. By understanding the provisions of Section 44ADA and managing your tax liability effectively, you can ensure compliance with the tax laws and minimize your tax liability as a professional in India. Section 44ADA, of Income Tax Act, 1961 Section 44ADA, of Income Tax Act, 1961 states that (1) Notwithstanding anything contained in sections 28 to 43C, 23[in case of an assessee, being an individual or a partnership firm other than a limited liability partnership as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008 (6 of 2009), who is a resident in India, and] is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid

Introduction Are you looking to understand about A Comprehensive Guide to Understanding the Special Provision for Computing Profits and Gains from the Business of Trading in Certain Goods under Section 44AC of Income Tax Act 1961 ?  This detailed article will tell you all about A Comprehensive Guide to Understanding the Special Provision for Computing Profits and Gains from the Business of Trading in Certain Goods under Section 44AC of Income Tax Act 1961. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. B K Goyal & Co LLP is a CA Firm in India practicing in the field of taxation, company compliance, company incorporations, auditing, tax advisory, planning, business advisory, income tax return filings and many more. The Income Tax Act 1961 governs the taxation system in India. It defines various provisions for calculating the tax liability of individuals and businesses. One such provision is Section 44AC, which deals with the special provision for computing profits and gains from the business of trading in certain goods. Section 44AC of Income Tax Act 1961 provides a simplified method for computing profits and gains from the business of trading in certain goods. It is applicable to persons who are engaged in the business of trading of specified goods and have opted for the presumptive taxation scheme under Section 44AD of the Income Tax Act. Let’s dive deeper into the provisions of Section 44AC and understand how it works. Understanding the Special Provision for Computing Profits and Gains under Section 44AC Under Section 44AC, a person engaged in the business of trading of specified goods can opt for the presumptive taxation scheme. The scheme allows a person to declare a percentage of his total turnover as income, and he is not required to maintain books of accounts for the same. The percentage of income that can be declared under the scheme is specified by the Central Government. As per the latest notification issued by the Central Government, a person can declare 6% of his total turnover as income under the scheme. The following are the key provisions of Section 44AC: Applicability The provisions of Section 44AC are applicable to persons who are engaged in the business of trading of specified goods and have opted for the presumptive taxation scheme under Section 44AD of the Income Tax Act. Specified Goods The provisions of Section 44AC are applicable to the following specified goods: Almond Cardamom Cashew nut Pepper Red chilli Saunf Turmeric Presumptive Taxation Scheme Under the presumptive taxation scheme, a person can declare a percentage of his total turnover as income. He is not required to maintain books of accounts for the same. As per the latest notification issued by the Central Government, a person can declare 6% of his total turnover as income under the scheme. Maintenance of Books of Accounts A person who opts for the presumptive taxation scheme under Section 44AC is not required to maintain books of accounts for the purpose of computing his income. However, he is required to maintain books of accounts for the purpose of calculating his turnover. Consequences of Not Maintaining Books of Accounts If a person who has opted for the presumptive taxation scheme under Section 44AC fails to maintain books of accounts, his income will be deemed to be 8% of his total turnover. Deductions A person who opts for the presumptive taxation scheme under Section 44AC is deemed to have claimed all deductions under the Income Tax Act. Therefore, he cannot claim any further deductions from his income. Filing of Income Tax Return A person who has opted for the presumptive taxation scheme under Section 44AC is required to file his income tax return by 31st July of the assessment year. FAQs Who can opt for the presumptive taxation scheme under Section 44AC? Ans: Persons engaged in the business of trading of specified goods can opt for the presumptive taxation scheme under Section 44AC. What are the specified goods covered under Section 44AC? Ans: Almond, Cardamom, Cashew nut, Pepper, Red chilli, Saunf, and Turmeric are the specified goods covered under Section 44AC. What is the percentage of income that can be declared under the presumptive taxation scheme under Section 44AC? Ans: As per the latest notification issued by the Central Government, a person can declare 6% of his total turnover as income under the scheme. Is a person who opts for the presumptive taxation scheme under Section 44AC required to maintain books of accounts? Ans: A person who opts for the presumptive taxation scheme under Section 44AC is not required to maintain books of accounts for the purpose of computing his income. However, he is required to maintain books of accounts for the purpose of calculating his turnover. Can a person who opts for the presumptive taxation scheme under Section 44AC claim any deductions from his income? Ans: No, a person who opts for the presumptive taxation scheme under Section 44AC is deemed to have claimed all deductions under the Income Tax Act. Therefore, he cannot claim any further deductions from his income. Conclusion Section 44AC of Income Tax Act 1961 provides a simplified method for computing profits and gains from the business of trading in certain goods. It is applicable to persons who are engaged in the business of trading of specified goods and have opted for the presumptive taxation scheme under Section 44AD of the Income Tax Act. The provisions of Section 44AC allow a person to declare a percentage of his total turnover as income, and he is not required to maintain books of accounts for the same. However, he is required to maintain books of accounts for the purpose of calculating his turnover. It is important to note that a person who opts for the presumptive taxation scheme under Section 44AC cannot claim any further deductions from

Introduction Are you looking to understand about A Comprehensive Guide to Understanding Special Provision for Computing Profits and Gains of Business of Plying, Hiring, or Leasing Goods Carriages under Section 44AE of Income Tax Act 1961 ?  This detailed article will tell you all about A Comprehensive Guide to Understanding Special Provision for Computing Profits and Gains of Business of Plying, Hiring, or Leasing Goods Carriages under Section 44AE of Income Tax Act 1961. Hi, my name is Shruti Goyal, I have been working in the field of Income Tax since 2011. I have a vast experience of filing income tax returns, accounting, tax advisory, tax consultancy, income tax provisions and tax planning. B K Goyal & Co LLP is a CA Firm in India practicing in the field of taxation, company compliance, company incorporations, auditing, tax advisory, planning, business advisory, income tax return filings and many more. Section 44AE of the Income Tax Act 1961 is a special provision that provides a simplified method for computing the profits and gains of businesses involved in plying, hiring, or leasing goods carriages. This section applies to individuals, Hindu Undivided Families (HUFs), and partnership firms that own not more than 10 goods carriages and are engaged in the business of plying, hiring, or leasing such goods carriages. The provision allows businesses to compute their income on a presumptive basis without maintaining detailed books of accounts. This saves them time, effort, and money that would otherwise have been spent on maintaining books of accounts and getting them audited. In this blog, we will take a closer look at Section 44AE and its implications for businesses. Who Can Avail the Benefits of Section 44AE? To avail the benefits of Section 44AE, a business must meet the following criteria: The business must own not more than 10 goods carriages at any time during the previous year. The business must be engaged in the business of plying, hiring, or leasing goods carriages. The goods carriages must not be used for any purpose other than for the business of plying, hiring, or leasing. If a business meets these criteria, it can opt to compute its income on a presumptive basis under Section 44AE. How is Income Computed Under Section 44AE? Under Section 44AE, the income of a business is computed on a presumptive basis based on the number of goods carriages owned by the business. The presumptive income is calculated as follows: For goods carriages with a gross vehicle weight (GVW) of up to 12,000 kg: Rs. 7,500 per month per vehicle or part of a month in case the vehicle was owned for less than a month. For goods carriages with a GVW exceeding 12,000 kg: Rs. 1,000 per ton of gross vehicle weight per month or part of a month in case the vehicle was owned for less than a month. For example, if a business owns 5 goods carriages with a GVW of up to 12,000 kg and 2 goods carriages with a GVW exceeding 12,000 kg, its presumptive income for the year would be calculated as follows: For 5 goods carriages with a GVW of up to 12,000 kg: 5 x Rs. 7,500 x 12 = Rs. 4,50,000 For 2 goods carriages with a GVW exceeding 12,000 kg: 2 x GVW x Rs. 1,000 x 12 = Rs. [insert amount] The total presumptive income for the year would be the sum of the above amounts. What are the Benefits of Computing Income Under Section 44AE? There are several benefits to computing income under Section 44AE: Simplified method: Businesses can compute their income on a presumptive basis without maintaining detailed books of accounts. This saves them time, effort, and money that would otherwise have been spent on maintaining books of accounts and getting them audited. Lower tax liability: Businesses can benefit from a lower tax liability as the presumptive income calculated under Section 44AE is lower than the actual income that may have been earned. This is because the presumptive income is calculated based on a fixed amount per vehicle, whereas the actual income may vary depending on various factors such as the number of trips made, distance travelled, and freight charges. No requirement of tax audit: Businesses that opt to compute their income under Section 44AE are not required to get their accounts audited under Section 44AB. This saves them the hassle and cost of getting their accounts audited. Avoidance of penalties: As businesses are not required to maintain detailed books of accounts and get them audited, they can avoid penalties for non-compliance with the provisions of the Income Tax Act. Increased compliance: Section 44AE encourages businesses to comply with the provisions of the Income Tax Act by providing a simplified method for computing income. This can lead to increased compliance and a reduction in tax evasion. What are the Limitations of Computing Income Under Section 44AE? While computing income under Section 44AE has several benefits, there are also some limitations that businesses should be aware of: Presumptive income cannot be less than Rs. 7,500 per month per vehicle: Businesses that own goods carriages with a GVW of up to 12,000 kg must declare a presumptive income of at least Rs. 7,500 per month per vehicle, even if their actual income is lower than this amount. No deduction for expenses: Businesses that opt to compute their income under Section 44AE cannot claim any deduction for expenses such as repairs and maintenance, depreciation, and interest on loans. Inability to carry forward losses: Businesses that opt to compute their income under Section 44AE cannot carry forward any losses incurred during the year to subsequent years. No option to revise income: Once a business has opted to compute its income under Section 44AE, it cannot revise its income at a later date. FAQs Q: Can businesses that own more than 10 goods carriages opt to compute their income under Section 44AE? A: No, businesses that own more than 10 goods carriages cannot avail the benefits