Dear Sir, Ma’am, the query is as follows –<\/p>\n
Both Section 44AD and Section 44ADA prescribe a minimum threshold of declaration of income of 6%\/8% and 50% of the turnover respectively in order to opt for presumptive taxation scheme, otherwise tax audit becomes applicable. These provisions also allow the assessee to declare income higher than the prescribed limit of 6%\/8% and 50% in the return of income.<\/p>\n
A question arises whether declaring such higher income is compulsory in case where the actual income of the Assessee exceeds these threshhold limits or can the assessee continue to opt to declare income only on the basis of the prescribed limit ?<\/p>\n
If yes, then the capital accrual of the Assessee in the form of savings shall exceed the income declared in ITR and it may become hard to explain high-value expenditure. For e.g \u2013 Assessee engaged in profession has a turnover of INR 45 lakhs from business & profession chooses to declare income @50% i.e. INR 22.5 lakhs in the income tax return. However, his actual income is INR 42 lakhs and he uses this actual income to purchase a house worth INR 30 lakh. If questioned by the income tax department regarding the source of such expenditure, he will find it difficult to explain income of INR 22.5 lakhs while expenditure is INR 20 lakhs<\/p>\n
Conversely if the answer is no, then the presumptive taxation scheme becomes redundant since the Assessee is anyways required to compute his actual income and also maintain books of accounts to support such calculations which does not appear to be the intent of these provisions.<\/p>\n","protected":false},"comment_status":"open","ping_status":"closed","template":"","qa_expert":[139],"qa_category":[23],"qa_tag":[188,109],"class_list":["post-18339","qa","type-qa","status-publish","hentry","qa_expert-research-team","qa_category-income-tax","qa_tag-higher-income","qa_tag-presumptive-taxation-scheme"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa\/18339","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/qa"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=18339"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=18339"}],"wp:term":[{"taxonomy":"qa_expert","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_expert?post=18339"},{"taxonomy":"qa_category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_category?post=18339"},{"taxonomy":"qa_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_tag?post=18339"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}