I'm a freelance software engineer, in a financial year my gross receipts are ₹24 Lakhs, expenses are ₹50,000. Can I opt for presumptive taxation section 44ADA & declare 50% (₹12 Lakhs) as my expense?
If I do so will I be in trouble in the future for underreporting my income & the IT department wants to know the source of remaining income?
And also should I be collecting GST? All my clients are from US & UK.
Ans: Section 44ADA eligibility is based on the nature of services that you provide. Technical consultancy for example is eligible.
Further, one is eligible if your total gross receipts are less than Rs 50 lakh in a year.
Under the Presumptive scheme,
Higher of the following is offered as presumptive income:
- 50% of the total receipts from the profession Income offered by the assessee from the profession
- Actual expenses
By following Section 44ADA, an assessee would get the following benefits:
- No need of maintaining books required under Section 44AA
- No requirement of having accounts audited under Section 44AB
Considering the complexity, it is better you avail the services of a Chartered Accountant, so that he can look at all the finer details of your case.