The Union Budget 2021 has proposed for the exclusion of Limited Liability Partnerships.
The financial bill presented by Finance Minister Nirmala Sitharaman states, “Clause 12 of the Bill seeks to amend section 44ADA of the Income-tax Act relating to special provision for computing profits and gains of profession on a presumptive basis.”
Section 44ADA is a special provision for calculating the profits and gains of small professionals in certain circumstances. Section 44ADA was introduced to extend the scheme of simplified presumptive taxation to specified professionals. Earlier, the presumptive scheme of tax was applicable only for small businesses. The presumptive scheme of taxation reduces the compliance burden on small professions and facilitates ease of doing business. Under the presumptive scheme of taxation, profits are presumed at 50% of the gross receipts.
By following Section 44ADA, an assessee would get the benefits of not needing to maintain books required under Section 44AA andnot require having accounts audited under Section 44AB.
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