FAQs on Section 44ADA of Income Tax Act

1. What is Section 44ADA of the Income Tax Act? 

Answer: Section 44ADA is a provision in the Income Tax Act that offers a presumptive taxation scheme for certain professionals, simplifying the calculation of their taxable income.

2. Who is eligible to avail of benefits under Section 44ADA? 

Answer: Professionals who are engaged in specified professions like legal, medical, engineering, architectural, accounting, technical consultancy, interior decoration, and others, with gross receipts not exceeding Rs. 50 lakh in a financial year, are eligible for benefits under Section 44ADA.

3. What professions are covered under Section 44ADA? 

Answer: Section 44ADA covers professions such as legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, and other notified professions.

4. How is the presumptive taxation scheme applicable under Section 44ADA? 

Answer: Under the presumptive taxation scheme of Section 44ADA, eligible professionals are allowed to declare a prescribed percentage (usually 50%) of their gross receipts as their taxable income, without maintaining detailed books of accounts.

5. What is the turnover limit for professionals under Section 44ADA? 

Answer: Professionals with total gross receipts or turnover of up to Rs. 50 lakh in a financial year can take advantage of the presumptive taxation scheme under Section 44ADA.

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6. Can professionals with a turnover above the prescribed limit still opt for the presumptive scheme? 

Answer: No, professionals whose gross receipts exceed Rs. 50 lakh in a financial year cannot avail of the presumptive taxation scheme under Section 44ADA. They are required to maintain regular books of accounts and file tax returns accordingly.

7. How is the income calculated for professionals under Section 44ADA?

Answer: For professionals opting for the presumptive taxation scheme, their taxable income is considered to be 50% of their total gross receipts for the financial year.

8. Are there any deductions allowed under the presumptive taxation scheme of Section 44ADA? 

Answer: No, professionals using the presumptive taxation scheme under Section 44ADA are not allowed to claim any further deductions against their income.

9. Can professionals under Section 44ADA claim expenses against their income?

Answer: No, professionals opting for the presumptive taxation scheme under Section 44ADA cannot claim any specific expenses against their income. The scheme assumes a fixed percentage of gross receipts as taxable income.

10. Is it mandatory for eligible professionals to opt for the presumptive scheme under Section 44ADA? 

Answer: No, it is not mandatory for eligible professionals to opt for the presumptive taxation scheme. They have the option to follow the regular taxation scheme and maintain detailed books of accounts if they choose.

11. Can professionals switch between the presumptive scheme and the regular scheme under Section 44ADA?

Answer: Yes, eligible professionals have the flexibility to switch between the presumptive taxation scheme under Section 44ADA and the regular taxation scheme in subsequent financial years.

12. What are the benefits of opting for the presumptive taxation scheme under Section 44ADA for professionals?

Answer: The presumptive taxation scheme under Section 44ADA offers simplicity in tax compliance, as professionals can pay taxes based on a predetermined percentage of their gross receipts, without the need for extensive bookkeeping. It reduces the burden of maintaining detailed accounts and saves time in tax filing.