Who Can Opt for Section 44ADA?

The following conditions must be met to be eligible to opt for section 44ADA:

• Must be a resident individual or a resident partnership firm (other than a limited liability partnership).
• The taxpayer must be engaged in a profession as per section 44AA(1), which includes legal professionals, Medical professionals, engineers and architects, chartered accountants, technical consultants, interior decorators, and other notified professionals.

Gross Receipts Limit Under Section 44ADA

To opt for the scheme, the gross receipts from the profession must be up to Rs 50 lakh. However, this limit has been revised to Rs 75 lakh from AY 2024-25, if the amount received during the previous year in cash/bearer or crossed cheque/draft is not more than 5% of the gross receipts during the previous year.

How is Income Calculated Under Section 44ADA?

If the conditions to opt for the presumptive scheme under section 44ADA are satisfied, the income must be presumed to be 50% of the gross receipts. However, you can choose to declare a higher income if you want.

After opting for this scheme, you cannot claim any other deductions under Sections 30 to 38, as it is considered that these deductions have already been allowed. Additionally, it is assumed that any disallowances under Sections 40, 40A, and 43B have already been considered while calculating the estimated income at 50%. Also, when necessary, the written-down value (WDV) of assets will be calculated as if the applicable depreciation had already been claimed in earlier years.

Can Someone declare income less than 50%?

Eligible taxpayers can declare their income as less than the deemed profits and gains. However, if their total income is more than the exemption limit, they must:

• Maintain proper books of accounts as per Section 44AA. ,
• Get their accounts audited under Section 44AB, no matter how much the turnover is.
• Submit the audit report one month before the return filing due date.