Section 44AD - Computing Profit & gains of Business on presumptive basis

First we read two important explanation :-

      1.  "Eligible assessee" means -

• an individual, HUF or a Partnership firm, who is a resident, but does not include a LLP firm and;
• Who has not claim deduction under any of section 10AA or deduction U/s 80IA-80RRB.

      2. "Eligible Business" means -

• Any business except the business of plying, hiring or leasing goods carriages referred to Sec. 44AE  and;
• Whose total turnover or gross receipt does not exceed two Crore rupees.

Sec. 44AD(1) :- 

• If an eligible assessee carried on eligible business willing to opt presumptive basis scheme, the rate of computation of income is 8% of total turnover or gross receipts of such business;
• or a rate higher then the aforesaid rate (i.e 8%) claimed to have been earned by the eligible assessee;
• shall be deemed to be the income under the head "Profit and gain of business".

Important Points-

        1. This provision shall not apply to- 

• A person carrying on profession as referred in Sec. 44AA;
• A person earning income in the nature of commission or brokerage; or
• A person carrying on any agency business.

      2. If an assessee declares income as per Sec. 44AD(1)-

• Deduction U/s 30 to 38 are not allowed;
• Not required to maintain books of account as per Sec. 44AA;
• Not required to get tax audit U/s 44AB.
• Assessee don't have to pay advance tax in installment, but assessee have to pay 100% advance tax on 15th March of that particular F.Y.

     3. An additional condition has been added, If assessee opting for the presumptive scheme-

• File presumptive scheme for at least 5 years in continuation
• If assessee decide to show and file profits as regular business before the end of these 5 years, you will lose presumptive taxation for the subsequent 5 years.