Computation of income on presumptive basis
Guest
(Querist) 13 August 2012
This query is : Resolved
What is the difference between calculation of Total Income and computation of income on presumptive basis? Why those two are different for an individual tax payer(sole proprietor)?
A V Vishal
(Expert) 13 August 2012
Businesses have been grown over the period of time due to general growth of the economy and varied other reasons. But at the same time various numbers of business and service providers, irrespective of their area of operations, earning substantial income are outside the tax net. Presumptive income scheme has been introduced to bring such business & service providers within tax net and at the same time, there is lower compliance cost for such tax payer and lower administrative burden on revenue too. From the A.Y. 2011-12 various schemes of presumptive taxation as applicable to small business has been consolidated under substituted section 44AD and whereas section 44AF (applicable to retail trade) has been deleted. Now scheme of presumptive taxation (other than presumptive taxation scheme applicable to non-resident) for small businesses is operated by two sections 44AD and 44AE.
Guest
(Querist) 14 August 2012
I have a small Defence HQ sponsored Security Services (A part of resettlement of the ex-servicemen for at the most four years from the date of retirement). Security guards are provided to the PSUs only. My income is only 14-18 % service charge being paid by the Principal employers i.e PSUs. All the expenditures including rents for the office as per the mandatory specifications, the part of the EPF,ESI, SERVICE TAX etc etc is to be paid by me being the sole proprietor.Now pl tell me whether a separate IT return each for me (being a pensioner)and another for my Firm be prepared. This will my first IT return as a proprietary nature.
A V Vishal
(Expert) 14 August 2012
No, you need to file a single return form viz.Sugam 4S/ITR 4 as the case may be for both your pension and as well as your business income.
Guest
(Querist) 19 August 2012
Is the interest paid on my FDRs(pension benefits)though not matured /withdrawn be added to my income while computing?
Will the name of the company be mentioned as there is no such column in ITR4?
Guest
(Querist) 28 September 2012
"Section 44AD
Applicable: xxxx
Applicable to class of taxpayer: Any resident individual.... and has not claimed deductions u/ss 10A, 10AA,10B, 10BA, 80HH to 80RRB in the relevant assessment year.
Presumptive or estimated income: Sum equal to 8% of the total turnover or gross receipt of the assessee.
Higher or lower income: Assessee at his option can claim such higher/lower amount earned by him. Assessee can also claim to have earned income lower than specified amount, subject to fulfilment of conditions as to maintenance of books of account etc.
Maintenance of books of account: Unlike provision contained in Ss. 44AD(4) (as stood prior to its replacement) & 44AE(4), no specific provision exempting from maintenance of books of account and other documents as prescribed u/s 44AA, when income is offered on presumptive basis. However in case assessee claims that he has earned income lower than specified percentage and such income is more than maximum amount not chargeable to tax, Ss. 44AD(5) and 44AA(2)(iv), mandates him to maintain books of accounts and other documents as specified u/s 44AA, get them audited from the accountant and furnish report as required u/s 44AB.
Deduction from presumptive income: No deduction is allowable under provisions of sections 30 to 38.xxx
Advance tax: Assessee offering income on presumptive basis provisions of Chapter XVII-C pertaining to Advance tax is not applicable to such assessee. Hence such assessee is not required to pay advance. However S. 44AE(4) may give rise to various peculiar unintended issues."
May I request a few clarification on the issue from the experts....
a) As I said earlier I am the sole proprietor of a security company where my earning is limited to service charge of 14-18 %.
a) What this means "has not claimed deductions u/ss 10A, 10AA,10B, 10BA, 80HH to 80RRB in the relevant assessment year."
b) "Sum equal to 8% of the total turnover or gross receipt of the assessee."
What is my turnover-Is it the total pay and allowances which my principal employers pay including pay/perks/EPF/ESI/uniforms for which I am a mere post office and no say but to comply with DGR guidelines or the service charge which is paid to me by my principal employer namely the PSUs? Can I take the service charge component as my gross receipts?
c)"Higher or lower income: Assessee at his option can claim such higher/lower amount earned by him. Assessee can also claim to have earned income lower than specified amount, subject to fulfilment of conditions as to maintenance of books of account etc."
What is meant by subject to fulfilment of conditions...
d) "Deduction from presumptive income: No deduction is allowable under provisions of sections 30 to 38.xxx "
In one side I am not required to file a separate ITR being the sole proprietor and if I take the option to tabulate presumptive tax I am not qualified any exemptions even if I include my pensions.
Can somebody explains please...
