Eligible Business under section 44AD ||Who is eligible and not eligible to take advantage of the presumptive taxation scheme of section 44AD?

​​​​​​​Eligible Business under section 44AD

The presumptive taxation scheme of section 44AD of income tax Act 1961 can be adopted by following persons:

1. Resident Individual
2. Resident Hindu Undivided Family (HUF)
3. Resident Partnership Firm (not LLP (Limited Liability Partnership Firm)

Section 44ADA of Income Tax Act for AY 2018-19 {Section 44AD in Hindi}

In other words, the scheme cannot be adopted by a non-resident and by any person other than an individual, a Hindu Undivided Family or a partnership firm (not LLP Firm).

Further, this presumptive taxation scheme cannot be adopted by a person who has made any claim towards deductions under section 10A/10AA/10B/10BA of income tax act or under sections 80HH to ​80RRB of income tax act in the relevant year. ​

Not Eligible Business under section 44AD

The scheme of  section 44AD of Income tax is designed to give relief to small taxpayers engaged in any business, except the following businesses:

• Business of plying, hiring or leasing goods carriages referred to in sections 44AE of income tax act.
• A person/ service provider who is carrying on any agency business.
• A person/service provider who is earning income in the nature of commission or brokerage
• Any business whose total turnover or gross receipts exceeds 2 crore rupees.

[Section 44AE of Income Tax Act] Section 44AD of Income Tax Act Bare Act – Section 44AD For AY 2018-19

Apart from above discussed businesses, a person/service provider carrying on profession as referred to in section 44AA(1) of income tax act is not eligible for presumptive taxation scheme under section 44AD of income tax act. ​

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