ITR 2018-19: 44 Ad Presumptive Taxation Under Income Tax Return Filing

Income Tax Return Filing


Presumptive taxation is a scheme which was offered by the income tax filing department to the small taxpayer for paying the tax on presumptive basis rather than making books of account and calculate the profit as per books. This is benefit for the small taxpayers who don’t want to make books of account and pays tax according to presumptive tax and makes his tax simpler.

What IS 44 AD?

44AD is a taxation scheme where a person involves in the business of trading can opt the scheme of 44AD i.e. presumptive taxation rather than makes books of account. Hey have to pay tax @6% in case of business of from bank transaction and @8% in case of cash transaction and they need to make books of account the only thing required to makes books of account of sale.


1. 44ad applied to all business except lying, hiring, and carriage business and also not applies where other presumptive taxation section applied.

2. It applied to the assesse individual, partnership firm, HUF.

3. The turnover to opt this scheme is 2cr, if assesse exceed this turnover cannot opt for this scheme.

4. 6% in case of business of from bank transaction and @8% in case of cash transaction are the rates for 44ad.

5. If a person claim that his profit are lower than the prescribed profit percent 6% or 8% and his income exceeds the basics exemption slab i.e. 250000 then his account get audited by a chartered accountant before filing it return online.

6. However if the assesse has claim that his profits are lower than prescribed 6% or 8% and his income are lower than basic exemption slab, then no accounts are required to be audited.


This additional condition has been added by substituting sub section (4) of 44AD which is –

If you are opting for the presumptive scheme, you must

1. File presumptive scheme for at least 5 years in continuation.

2. If you decide to show and file profits as per regular business before the end of these 5 years, you will lose presumptive benefits and disallowed from presumptive taxation for the subsequent 5 years.

Please note that 5 years shall be counted starting the year in which you first file usual taxes for such business.

The government is discouraging taxpayers to misuse the scheme by efiling income tax under this scheme and keep changing their option often. So if you opt for presumptive continue for 5 years and if you want to opt out, you’ll be barred from resuming presumptive for a period of 5 years.




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