Introduction
Are you looking to understand about A Comprehensive Guide to Understanding the Special Provision for Computing Profits and Gains from the Business of Trading in Certain Goods under Section 44AC of Income Tax Act 1961 ?
This detailed article will tell you all about A Comprehensive Guide to Understanding the Special Provision for Computing Profits and Gains from the Business of Trading in Certain Goods under Section 44AC of Income Tax Act 1961.
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The Income Tax Act 1961 governs the taxation system in India. It defines various provisions for calculating the tax liability of individuals and businesses. One such provision is Section 44AC, which deals with the special provision for computing profits and gains from the business of trading in certain goods.
Section 44AC of Income Tax Act 1961 provides a simplified method for computing profits and gains from the business of trading in certain goods. It is applicable to persons who are engaged in the business of trading of specified goods and have opted for the presumptive taxation scheme under Section 44AD of the Income Tax Act.
Let’s dive deeper into the provisions of Section 44AC and understand how it works.
Understanding the Special Provision for Computing Profits and Gains under Section 44AC
Under Section 44AC, a person engaged in the business of trading of specified goods can opt for the presumptive taxation scheme. The scheme allows a person to declare a percentage of his total turnover as income, and he is not required to maintain books of accounts for the same.
The percentage of income that can be declared under the scheme is specified by the Central Government. As per the latest notification issued by the Central Government, a person can declare 6% of his total turnover as income under the scheme.
The following are the key provisions of Section 44AC:
Applicability
The provisions of Section 44AC are applicable to persons who are engaged in the business of trading of specified goods and have opted for the presumptive taxation scheme under Section 44AD of the Income Tax Act.
Specified Goods
The provisions of Section 44AC are applicable to the following specified goods:
- Almond
- Cardamom
- Cashew nut
- Pepper
- Red chilli
- Saunf
- Turmeric
Presumptive Taxation Scheme
Under the presumptive taxation scheme, a person can declare a percentage of his total turnover as income. He is not required to maintain books of accounts for the same.
As per the latest notification issued by the Central Government, a person can declare 6% of his total turnover as income under the scheme.
Maintenance of Books of Accounts
A person who opts for the presumptive taxation scheme under Section 44AC is not required to maintain books of accounts for the purpose of computing his income.
However, he is required to maintain books of accounts for the purpose of calculating his turnover.
Consequences of Not Maintaining Books of Accounts
If a person who has opted for the presumptive taxation scheme under Section 44AC fails to maintain books of accounts, his income will be deemed to be 8% of his total turnover.
Deductions
A person who opts for the presumptive taxation scheme under Section 44AC is deemed to have claimed all deductions under the Income Tax Act. Therefore, he cannot claim any further deductions from his income.
Filing of Income Tax Return
A person who has opted for the presumptive taxation scheme under Section 44AC is required to file his income tax return by 31st July of the assessment year.
FAQs
- Who can opt for the presumptive taxation scheme under Section 44AC? Ans: Persons engaged in the business of trading of specified
goods can opt for the presumptive taxation scheme under Section 44AC.
What are the specified goods covered under Section 44AC? Ans: Almond, Cardamom, Cashew nut, Pepper, Red chilli, Saunf, and Turmeric are the specified goods covered under Section 44AC.
What is the percentage of income that can be declared under the presumptive taxation scheme under Section 44AC? Ans: As per the latest notification issued by the Central Government, a person can declare 6% of his total turnover as income under the scheme.
Is a person who opts for the presumptive taxation scheme under Section 44AC required to maintain books of accounts? Ans: A person who opts for the presumptive taxation scheme under Section 44AC is not required to maintain books of accounts for the purpose of computing his income. However, he is required to maintain books of accounts for the purpose of calculating his turnover.
Can a person who opts for the presumptive taxation scheme under Section 44AC claim any deductions from his income? Ans: No, a person who opts for the presumptive taxation scheme under Section 44AC is deemed to have claimed all deductions under the Income Tax Act. Therefore, he cannot claim any further deductions from his income.
Conclusion
Section 44AC of Income Tax Act 1961 provides a simplified method for computing profits and gains from the business of trading in certain goods. It is applicable to persons who are engaged in the business of trading of specified goods and have opted for the presumptive taxation scheme under Section 44AD of the Income Tax Act.
The provisions of Section 44AC allow a person to declare a percentage of his total turnover as income, and he is not required to maintain books of accounts for the same. However, he is required to maintain books of accounts for the purpose of calculating his turnover.
It is important to note that a person who opts for the presumptive taxation scheme under Section 44AC cannot claim any further deductions from his income. Therefore, it is essential to carefully evaluate the pros and cons of opting for this scheme before making a decision.
In conclusion, understanding the provisions of Section 44AC is crucial for persons engaged in the business of trading of specified goods. This comprehensive guide has provided an overview of the provisions of Section 44AC and answered some commonly asked questions about the same.
Section 44AC, of Income Tax Act, 1961
Section 44AC, of Income Tax Act, 1961 states that
[Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]