Section 44(ad) No Advance tax, no Books of Accounts-File return as per section 44ad of Income Tax - Professionals - Taxation - TIK Share
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Section 44(ad) No Advance tax, no Books of Accounts-File return as per section 44ad of Income Tax

CA Pulkit Sharma


15 December is nearing and people are rushing to deposit advance tax. I met a client last day, his concern was advance tax payment. I told him sir this time we will file return as per section 44(ad of) Income tax and hence no need to pay advance tax.

Client is filing the return from last 35 years. But he was not aware of the provisions.

And intrestingly he was showing profit more than 27% of sales.

The section 44(ad) is recommended because though the profit is more than 8% still his return can be scrutinized for expenses claimed. But if return was filed as per 44(ad), income tax authorities can inspect the expenses but only sale.

Due to it being a newer section and tax consultants not recommanding to assessees, the 44(ad) is not used.

For any business if profit is more than 8%, i believe section 44(ad) is best suited for them.

Section 44(ad) No Advance tax, no Books of Accounts-File return as per section 44ad of Income Tax

Use form 4S to file return as per section 44(ad)

Stock Guru


If someone trades in stock market is the section also applicable to them? Which all business can avail this facility?


CA Pulkit Sharma


The section is applicable to only Business and not professions. So people doing any kind of business except few like banking etc. can benefit from this section.


Vedanta Deshika


@Pulkit ,

It is also important to note few other things about Sec 44AD for the benefit of our assessee friends.
If you opt for 44AD schemes, major benefits are the below two

1. You dont have to maintain books of account and no need to get any audit done
2. You dont have to pay Advance tax as per the due dates, ( you can pay self assessement tax at once at year end)

1. It is applicable only when your turnover from business is less than Rs 1 crore
2. It is only applicable to Individual, HUF, Partnership firm only . This scheme is not available to Companies and LLPs
3. This section cannot be applied when you do the following business 

a. Plying of goods carriage

b. Hiring of goods carriage

c. Leasing of goods carriage 

Other than these three business, Sec 44AD scheme can be applied for any business even for that matter the stock trading business. ( @Stockguru , come back in case of further queries)

Other things an assessee must note is that the section comes with the following limitations for assessee
1. If you are pting this scheme, you cant get benefits of Depreciations and other expense under sec 30 to 38
2. You cannot claim Chapter VIA Deductions
3. Yo cannot claim exemptions under Sec 10B, 10A, 10A, 10AA

The biggest of headaches is this rule

If you declare your profits less than 8% and yout Total income is more than the basic exemption limit, you have to maintain BOOKS OF ACCOUNT + TAX AUDIT

Hope all small enterprenuers take note of these important rules and do their tax planning effectively

~CA Vedanta Deshika