watch_later 19/12/21

Tax payer can file return under section 44AD, however he cannot loop out of 44AD for 5 years.

If 44Ad is not applicable then he cannot opt for 44Ad for next years.

I have a doubt regarding this.

One person was filing return under section 44AD, however last year his turnover was more than 2 crore, and he filed return after tax audit under section 44AB.

Now this year his turnover is less than 2 crore, so question is can he opt for 44AD?

5 Responses | Latest response: 21/12/21 | Sort by Likes(thumb_up) Recent | Income-Tax Reply
watch_later 19/12/21

Section 44ad is not applicable to him since he was out automatically due to the turnover. Now rather than opting for sec 44 Ad and paying tax on estimated basis. He can go for audit u.s 44AB directly to be on safer side. 

watch_later 19/12/21

He cannot file under 44AD or just for shake of safety he need to choose 44AB?

Whether he has option available to file under section 44AD?

watch_later 20/12/21

If respective individual falls under tax audit category , it is advisable to go for section 44ab .

watch_later 20/12/21


Sales for current year is less than 2 crore and last year it was more than 2 crore.

So current year he can opt for 44AD. But question is whether he can opt as he broken 5 year rule?

watch_later 21/12/21

This is interesting question.

Whether a person can re-enter 44AD after exit due to turnover more than 2 crore.

Here we need to go through section 44AD(1) of Income Tax Act, as per this 44AD is applicable on eligible business and eligible business specifically says business with turnover less than 2 crores.

Since last year he had sales more than 2 crore, so 44AD was not applicable. So he did not opt out of 44AD on his will but due to his business no more an eligible business.

So he has not broken cycle as specified in 44AD(4). He can file return under section 44AD for current AY.


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