What is it you need to know about the Tax Filing of small scale firms?
To give relief to small taxpayers from the tedious job of maintenance of books of account and from getting the accounts audited, the Income-tax Act has framed the presumptive taxation scheme under sections 44AD and section 44AE. The provisions of section 44AD are applicable to such resident assesse who is an Individual, Hindu Undivided Family and Partnership Firm but not Limited Liability Partnership Firm.
Unlike section 44AE, in case of section 44AD there is a restriction on which categories of assessees can opt for the scheme. Only specific categories of resident assessees as discussed above can opt for this scheme. The presumptive taxation scheme under these provisions can be opted for by the eligible assessee who is engaged in any business (except the business of plying, hiring or leasing goods carriages referred to in section 44AE), whose turnover or gross receipts from such business do not exceed the prescribed limit of audit under section 44AB
As per Section 44AB, the Tax audit will be applicable to the Assessee carrying on business, if his turnover exceeds Rs 1,00,00,000 effectively from the previous year 2012-13. For the previous year 2011-12, this limit was Rs. 60,00,000
Further, these provisions can be adopted by the assessee only if he has not claimed deduction under:
Section 10A: Special provisions in respect of newly established Units in Special Economic Zones
Section 10AA: Special provision in respect of newly established undertakings in free trade zone
Section 10B: Special provisions in respect of newly established hundred per cent export-oriented undertakings
Section 10BA: Special provisions in respect of export of certain articles or things or under sections 80HH to 80RRB in the relevant year.
Moreover, the provisions of section 44AD cannot be adopted by an assessee who is engaged in any profession as prescribed under section 44AA or is carrying on an agency business or is earning income in the nature of commission or brokerage.
As per section 44AA, any person carrying on any of the following professions is required to maintain books of account:
- Chartered Accountant
- Technical consultancy
- Interior designers
Any other such professions as may be notified by the central board of direct taxes