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India Budget Series

INTRODUCTION OF PRESUMPTIVE TAXATION SCHEME FOR PROFESSIONALS

The existing provisions of presumptive taxation do not include professionals within their ambit.

It is proposed to include professionals under the net of presumptive taxation by inserting a new Section 44ADA, which contains the following:-

The presumptive taxation scheme shall apply to professionals such as legal, medical, engineering, architecture, accountancy, technical consultancy or interior decoration or any other profession notified in the Official Gazette

The gross receipts from profession shall not exceed Rs. 50 lakhs

The presumptive rate of taxation shall be 50% of the total gross receipts or a sum higher than the presumptive profit, actually earned by the professional unless otherwise, the net profit offered is less than the profit at presumptive rate of taxation and the same is higher than the basic exemption limit.

The scheme shall apply to residents who are individual, HUF or partnership firm but not Limited Liability Partnership firm

The professional shall be deemed to have been allowed all deductions from Section 30 to Section 38 and the WDV of any asset shall be calculated as if the depreciation has been actually allowed for relevant assessment years. Books of accounts need not be maintained by the professional and audited if opted for presumptive taxation scheme, unless otherwise, the net profit offered is less than the profit at presumptive rate of taxation and the same is higher than the basic exemption limit

The deduction for partner’s remuneration is not made available in this section though it has not been expressly stated in the memorandum

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent assessment years.

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