Maintaining detailed ledgers and balance sheets can be challenging for small shopkeepers, wholesalers, and retail operators. Section 44AD of the Income Tax Act provides relief by allowing presumptive taxation.
1. What is Presumptive Taxation?
Under Section 44AD, small businesses with an annual turnover of up to ā¹3 Crores (increased limit for businesses with >95% digital receipts) can declare profits at a flat rate of:
- 6% of turnover for transactions received digitally (online, card, UPI).
- 8% of turnover for cash receipts.
2. No Bookkeeping Needed
If you declare profits under this section, you are exempt from maintaining books of accounts under Section 44AA and getting them audited under Section 44AB.
3. Easy Advanced Tax Payments
Instead of paying advance taxes quarterly in four installments, presumptive taxpayers can pay their entire advance tax liability in a single installment by March 15.
Is Section 44AD right for your shop?
Book an online appointment with Tax Element to verify which regime and section maximize profit compliance for your business.
Book an online appointment with Tax Element to verify which regime and section maximize profit compliance for your business.