TDS section applied by payer doesn't decide recipient's tax regime

TAXMAN’S NOTICE: SEC 44AD VS 44ADA

- SANJEEV SINHA.

‘The income-tax department is scrutinising social media content creators, scriptwriters, advertising professionals, and consultants who filed returns under Section 44AD, questioning why they did not opt for Section 44ADA, according to media reports.

The issue stems from the fact that many of these individuals do not fall under the specified professions listed in Section 44AA, creating ambiguity and possible tax disputes.

Essence of Section 44AD

Section 44AD isa presumptive taxation scheme for small businesses — resident individuals, Hindu Undivided Families (HUFS), or partnership firms, excluding limited liability partnerships (LLPs) — with turnover up to₹2 crore (₹3 crore if cash receipts are under 5 per cent). “It allows them to declare income at 6 per cent (digital receipts) or 8 per cent (cash receipts) without maintaining books or undergo an audit,” says Rohinton Sidhwa, partner, Deloitte India.

The scheme excludes professionals specified in Section 44AA, commission or brokerage earners, agency businesses, and goods carriage operators.