02 — Income tax
ITR filing — business & presumptive (44AD / 44ADA)
Traders, contractors, freelancers and consultants — presumptive where it fits, full books where it does not, with advance tax planned rather than discovered.
Presumptive taxation exists so that a small business does not have to keep audited books. Used correctly it saves a great deal of time and, quite often, tax.
Section 44AD covers most small businesses and declares a percentage of turnover as income — the percentage is lower for receipts taken through banking channels than for cash, which is a real incentive to bill digitally. Section 44ADA covers specified professionals: consultants, designers, doctors, lawyers, architects, technical writers. Both schemes carry turnover ceilings, and both have an enhanced ceiling where cash receipts stay within a small proportion of the total.
The trap is the exit. Once you opt out of 44AD, you are locked out of it for a run of years and pushed into audit territory. We check that before opting in, not after.
Where presumptive does not fit — losses, heavy depreciation, a partnership paying interest and remuneration — we prepare proper accounts and the audit report if section 44AB requires one. Either way you get an advance tax schedule for the coming year, so the June, September, December and March instalments are decisions rather than surprises.
Start with a call about this
Thirty minutes, a fixed quote in writing the same day, and the fee adjusted against the work if you go ahead within fourteen days.
Questions
About itr filing — business & presumptive (44ad / 44ada)
The things people ask us before they start.
Am I eligible for presumptive taxation?
It turns on your line of work, your turnover and how much of it comes in through the bank. The ceilings are higher where cash receipts stay within a small share of total receipts. Send us last year's figures and we will tell you which section fits and whether it is worth using.
Do I still need to pay advance tax under 44AD?
Yes, but on a simplified schedule — a presumptive taxpayer pays the whole advance tax liability in a single instalment by 15 March instead of four times a year.
Do I need a tax audit?
Only above the section 44AB limits, or where you declare less than the presumptive rate having previously opted in. The audit limit is higher for businesses whose cash receipts and cash payments both stay within a small share of the total.
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