Presumptive Tax for Therapists in Clinics

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  1. Suneera

    Suneera New Member

    Hi I am a practicing Audiologist & Speech Therapist. I have a clinic where I do hearing testing, dispensing hearing aid (sale) and speech therapy. I would like to know whether I can submit my income tax return under section 44AD. If yes how to calculate the tax? If no how should I file the return? I have not file the return for the year 2015-16. Kindly help me with the answer.

    Regards,
    Suneera
     
  2. ZED

    ZED Well-Known Member

    If you are asking for assessment year 2015-16 , then you can not claim the benefit u/s 44AD. You will have to file ITR-4 and compute the profit accordingly. If you are not sure as to how to calculate the tax then I suggest you kindly take someone's help or atleast get all the computation checked by someone who knows the provisions.

    Profession is now(From Financial Year beginning from 01.04.16 ) covered under newly inserted section (i.e S.44ADA)

    44ADA.(1) Notwithstanding anything contained in sections 28 to 43C, in the case of an assessee, being a resident in India, who 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”.

    (2) 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.

    (3) 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.

    (4) 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.’








    Extracts from memo

    "The existing scheme of taxation provides for a simplified presumptive taxation scheme for certain eligible persons engaged in certain eligible business only and not for persons earning professional income.

    In order to rationalize the presumptive taxation scheme and to reduce the compliance burden of the small tax payers having income from profession and to facilitate the ease of doing business, it is proposed to provide for presumptive taxation regime for professionals.
    In this regard, new section 44ADA is proposed to be inserted in the Act to provide for estimating the income of an assessee who is engaged in any profession referred to in sub-section (1) of section 44AA such as legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette and whose total gross receipts does not exceed fifty lakh rupees in a previous year, at a sum equal to fifty per cent. of the total gross receipts, or, as the case may be , a sum higher than the aforesaid sum earned by the assessee.
    The scheme will apply to such resident assessee who is an individual, Hindu undivided family or partnership firm but not Limited Liability partnership firm. Under the scheme, the assessee will be deemed to have been allowed the deductions under section 30 to 38. Accordingly, the written down value of any asset used for the purpose of the profession of the assessee will be deemed to have been calculated as if the assessee had claimed and had actually been allowed the deduction in respect of depreciation for the relevant assessment years.
    It is also proposed that the assessee will not be required to maintain books of account under sub-section (1) of section 44AA and get the accounts audited under section 44AB in respect of such income unless the assessee claims that the profits and gains from the aforesaid profession are lower than the profits and gains deemed to be his income under sub-section (1) of section 44ADA and his income exceeds the maximum amount which is not chargeable to income-tax. These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent years."
     
  3. Suneera

    Suneera New Member

    Hello Zed, thanks for the reply. So you mean to say the books of accounts needs to be maintained and need to submit the return for the previous and current year in the ITR 4?
     
  4. ZED

    ZED Well-Known Member

    Hello Ms. Suneera,
    Maintenance of books of accounts is governed by S.44AA , and filing of return is governed by S.139.
    [My answer to both of your queries is prima facie affirmative, but there are certain factors which would be of relevance to you. For your reference I am citing extracts of certain relevant provisions]

    [You must consult a tax practitioner or a CA in your locality so as to ensure proper compliance of the Income Tax Act . Chapter of Profit and Gains is one of the biggest chapter of the Income Tax Act , and I would not recommend anyone to handle it by themselves unless they are well versed with the provisions of the Income Tax Act.]


    44AA. (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.

    Hence, in your case it is mandatory to maintain books of accounts.

    Further as per Rule 6F of Income tax rules
    6F. (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or authorised representative or film artist shall keep and maintain the books of account and other documents specified in sub-rule (2) :

    [Provided that nothing in this sub-rule shall apply in relation to any previous year in the case of any person if his total gross receipts in the profession do not exceed one lakh fifty thousand rupees in any one of the three years immediately preceding the previous year, or, where the profession has been newly set up in the previous year, his total gross receipts in the profession for that year are not likely to exceed the said amount.]

    (2) The books of account and other documents referred to in sub-rule (1) shall be the following, namely:—

    (i) a cash book;
    (ii) a journal, if the accounts are maintained according to the mercantile system of accounting;
    (iii) a ledger;
    (iv) carbon copies of bills, whether machine numbered or otherwise serially numbered, wherever such bills are issued by the person, and carbon copies or counterfoils of machine numbered or otherwise serially numbered receipts issued by him:
    Provided that nothing in this clause shall apply in relation to sums not exceeding twenty-five rupees;
    (v) original bills wherever issued to the person and receipts in respect of expenditure incurred by the person or, where such bills and receipts are not issued and the expenditure incurred does not exceed fifty rupees, payment vouchers prepared and signed by the person:
    Provided that the requirements as to the preparation and signing of payment vouchers shall not apply in a case where the cash book maintained by the person contains adequate particulars in respect of the expenditure incurred by him.


    (3) A person carrying on medical profession shall, in addition to the books of account and other documents specified in sub-rule (2), keep and maintain the following, namely :—

    (i) a daily case register in Form No. 3C;
    (ii) an inventory under broad heads, as on the first and the last day of the previous year, of the stock of drugs, medicines and other consumable accessories used for the purpose of his profession.



    [There are other provisions also which are of relevance but have not been cited]
     
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