What is Section 44AD of Income Tax?
As per the rules laid down in Section 44AD of income tax, a business owner is not required to maintain detailed books of accounts if her/his turnover is less than INR 2 crores. As per the rules of this section, a taxpayer can declare profit at the rate 8% of their turnover and need not maintain complete books of accounts. Furthermore, if the revenue is received through crossed cheques, bank drafts (DD), credit cards, debit cards or through electronic means like net banking (RTGS, IMPS, NEFT), or even UPI or BHIM Aadhar Pay, the business owner can declare a profit to the tune of 6% of their turnover.
While a taxpayer’s actual profit could be more than 8%, however the maximum amount of profit will be limited at 8% as per Section 44AD.