Taxation Exam > Taxation Videos > Income Tax for assessment (Inter Level) > S 44AD. Small Business
S 44AD. Small Business Video Lecture | Income Tax for assessment (Inter Level) - Taxation
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FAQs on S 44AD. Small Business Video Lecture - Income Tax for assessment (Inter Level) - Taxation
| 1. What is the purpose of Section 44AD of the Income Tax Act? |  |
Ans. Section 44AD of the Income Tax Act provides a simplified method of calculating the taxable income for small businesses. It allows eligible taxpayers to declare a prescribed percentage of their total turnover as their taxable income, without the need for maintaining detailed books of accounts.
| 2. Who is eligible to opt for the presumptive taxation scheme under Section 44AD? | |
Ans. Small businesses with a total turnover of up to Rs. 2 crore (or Rs. 1 crore for professionals) are eligible to opt for the presumptive taxation scheme under Section 44AD. This includes individuals, Hindu Undivided Families (HUFs), and partnerships.
| 3. How is the taxable income calculated under Section 44AD? | |
Ans. Under Section 44AD, the taxable income is calculated by applying a prescribed percentage (8% for non-digital receipts and 6% for digital receipts) to the total turnover of the business. The result is considered as the taxable income, and no further deductions or expenses are allowed to be claimed.
| 4. Can a taxpayer opt for the presumptive taxation scheme under Section 44AD for one year and not for the subsequent year? | |
Ans. Yes, a taxpayer has the flexibility to opt for the presumptive taxation scheme under Section 44AD for one year and not for the subsequent year. However, once the taxpayer opts out of the scheme, they cannot opt for it again for the next five years.
| 5. What are the advantages of opting for the presumptive taxation scheme under Section 44AD? | |
Ans. Opting for the presumptive taxation scheme under Section 44AD offers several advantages for small businesses. It eliminates the need for maintaining detailed books of accounts, reduces the compliance burden, and provides a simple and hassle-free method of calculating taxable income. Additionally, it allows the taxpayer to declare a lower income than the actual profit, which may result in a lower tax liability.
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Nov 16, 2024 Last updated |
Video Description: S 44AD. Small Business for Taxation 2024 is part of Income Tax for assessment (Inter Level) preparation.
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