Section 44ADA of Income Tax Act for AY 2023-24

Section 44ADA of Income Tax Act amended by Finance Act 2022 and IT Rules 1962. Computing profits and gains of profession on presumptive basis.

Amended and updated notes on section 44ADA of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to special provision for computing profits and gains of profession on presumptive basis.

Chapter IV (Sections 14 to 59) of the Income Tax Act 1961 deals with the provisions related to computation of total income. Section 44ADA of IT Act 1961-2023 provides for special provision for computing profits and gains of profession on presumptive basis.

Recently, we have discussed in detail section 44AD (Special provision for computing profits and gains of business on presumptive basis) of IT Act 1961. Today, we learn the provisions of section 44ADA of Income-tax Act 1961. The amended provision of section 44ADA is effective for financial year 2022-23 relevant to the assessment year 2023-24.

In this article, you will learn detail of the provisions of section 44ADA of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.

Section-44ADA: Special provision for computing profits and gains of profession on presumptive basis

Section 44ADA(1) of Income Tax Act

Notwithstanding anything contained in sections 28 to 43C, in case of an assessee, being an individual, Hindu undivided family or a partnership firm other than a limited liability partnership as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act, 2008, who is a resident in India, and is engaged in a profession referred to in sub-section (1) of section 44AA and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head “Profits and gains of business or profession”.

[Sub-section(1) of section 44ADA has been amended (substituted) w.e.f. 1st April, 2021 by the Finance Act 2021]

Section 44ADA(2) of Income Tax Act

Any deduction allowable under the provisions of sections 30 to 38 shall, for the purposes of sub-section (1), be deemed to have been already given full effect to and no further deduction under those sections shall be allowed.

Section 44ADA(3) of Income Tax Act

The written down value of any asset used for the purposes of profession shall be deemed to have been calculated as if the assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years.

Section 44ADA(4) of Income Tax Act

Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.


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