What Are The Regulations Related To Presumptive Taxation Scheme In The Income Tax Rule In India?

According to the Income Tax (IT) regulation in India, there is a provision for presumptive taxation. As per section 44AA of the Income-tax Act, 1961, a person engaged in business or profession is required to maintain regular books of account under certain circumstances. Income Tax guideline informs, “To give relief to small taxpayers from this tedious work, the Income-tax Act has framed the presumptive taxation scheme under sections 44AD, sections 44ADA, sections 44AE, Section 44BB, and Section 44BBB.”

A person adopting the presumptive taxation scheme can declare income at a prescribed rate and, in turn, is relieved from the tedious job of maintenance of books of account.

For small taxpayers, the Income-tax Act, of 1961 has framed presumptive taxation schemes mentioned below, as mentioned in the official IT portal.

Section 44AD mentions that, computation of income on an estimated basis in the case of taxpayers [being a resident individual, resident Hindu undivided family, or resident partnership firm (not being a limited liability firm] engaged in certain business subject to certain conditions.

Section 44ADA mentions that, the computation of professional income on an estimated basis for the assessee being a resident in India and engaged in a profession referred to in section 44AA(1) is subject to certain conditions.

Section 44AE mentions that, the computation of income on an estimated basis in the case of taxpayers (being an Individual, HUF, AOP, BOI, Firm, Company, Cooperative society, or any other person may be resident or non-resident) engaged in the business of plying, leasing or hiring goods carriages, subject to certain conditions.

Section 44B mentions that, taxation of shipping profits derived by a person being a non-resident in India, subject to certain conditions.

Section 44BB mentions that, the computation of taxable income of a person being a non-resident (may be an Indian citizen or a foreign citizen) from activities connected with the exploration of mineral oils, is subject to certain conditions.

Section 44BBA mentions that, the computation of income in respect of foreign airlines, is subject to certain conditions.

Additionally, section 44BBB mentions that, the computation of profits and gains of foreign companies engaged in the business of civil construction, is subject to certain conditions.