Budget 2012 has barred professionals for availing section 44AD (Presumptive Taxation Scheme) and the crucial thing is that it is proposed to take effect retrospectively. Under this scheme, income equal to or higher than the 8% of the total turnover or gross receipt receipts is deemed to be the profits and gains from business known as presumptive or estimated income. Individuals, Hindu Undivided Family (HUF) and a partnership Firm who is resident and whose turnover or gross receipts of the business does not exceed certain specified limit and engaged in any type of business except the business of plying, hiring or leasing goods carriages are covered under section 44AD. Proposed to exclude professionals from section 44AD scheme In Budget, it is proposed that the scheme under section 44AD will not be available to â€“
- a person carrying on profession as referred to in sub-section (1) of section 44AA;
- persons earning income in the nature of commission or brokerage income; or
- a person carrying on any agency business.
Here, the vital point is that this amendment is proposed to take effect retrospectively from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-12 and subsequent assessment years. Limit of Turnover or gross receipts In Budget, it is also proposed that for the purposes of presumptive taxation scheme u/s 44AD, the threshold limit of total turnover or gross receipts would be increased from sixty lakh rupees to one crore rupees. This amendment will take effect from 1st April, 2013 and will, accordingly, apply to the assessment year 2013-14 and subsequent assessment years.