Section 44BBB of the Income Tax Act, 1961 provides for a special presumptive taxation scheme for non-residents engaged in the business of providing exploration services or production services in connection with mining.
Under this section, a non-resident engaged in the business of providing exploration or production services to a person who is a resident in India, or to a permanent establishment of a foreign company in India, can opt to declare his income on a presumptive basis. The prescribed rate of income is 10% of the gross receipts, subject to certain conditions.
This provision is aimed at providing a simpler and more certain tax regime for non-residents engaged in the mining sector. It also helps to attract foreign investment in the mining sector by providing a more favourable tax regime.
It is important to note that the benefit of the presumptive taxation scheme under Section 44BBB is available only to non-residents who are engaged in the business of providing exploration or production services in connection with mining. Residents and non-residents engaged in other businesses cannot avail of this scheme.
Section 44BB of the Income Tax Act, 1961 provides a special provision for computing the taxable income of non-residents engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire for, prospecting for, or extraction or production of, mineral oils.
Under this provision, the taxable income of a non-resident taxpayer is deemed to be 10% of the gross receipts received by the taxpayer from such business. If the taxpayer is engaged in the business of supplying plant and machinery on hire for prospecting for, or extraction or production of, mineral oils, the deemed income shall be 50% of the gross receipts received by the taxpayer.
Taxpayers opting for the presumptive taxation scheme under Section 44BB are not required to maintain regular books of accounts or undergo a tax audit, subject to certain conditions. However, any income earned by the taxpayer from other sources is required to be added to the deemed income and tax is to be calculated on the total income as per the applicable tax rates.
It is important to note that the presumptive taxation scheme under Section 44BB is applicable only to non-resident taxpayers engaged in the business of prospecting for, or extraction or production of, mineral oils and providing services or facilities in connection with such business.
Section 44BAA of the Income Tax Act, 1961 deals with the presumptive taxation scheme for professionals. It provides an option to professionals to declare their income on a presumptive basis, which means that they need not maintain detailed books of accounts.
Under this section, professionals such as lawyers, doctors, engineers, accountants, architects, and others, can opt to declare their income at a prescribed rate of 50% of their gross receipts, subject to a maximum limit of Rs. 50 lakhs.
This provision is aimed at simplifying the compliance burden for professionals and reducing their compliance costs. However, if the professional opts for this scheme, he cannot claim any deduction or allowance under sections 30 to 38 of the Income Tax Act, which relate to expenses incurred for earning the income.
It is important to note that this scheme is optional, and professionals who maintain proper books of accounts and are able to show their income and expenses accurately may choose not to opt for this scheme.
Section 44AA of the Income Tax Act, 1961 lays down the provisions related to maintenance of books of account by certain taxpayers.
As per this section, every person carrying on a profession or a business (other than those specified under Section 44AE, 44BB, and 44BBB) is required to maintain books of account if the total sales, turnover, or gross receipts in the previous year exceed Rs. 2,50,000 or if the income from profession or business exceeds the amount chargeable to tax under the Income Tax Act.
The books of account to be maintained under Section 44AA should contain the following information:
- Records of all sales and purchases made in the course of business or profession.
- Details of all the expenses incurred in relation to the business or profession.
- Details of all the assets and liabilities of the business or profession.
The books of account should be maintained for a period of 6 years from the end of the relevant assessment year.
It is important to note that non-maintenance of books of account as required under Section 44AA may attract penalty under Section 271A of the Income Tax Act. Therefore, it is advisable for taxpayers carrying on business or profession to maintain proper books of account and comply with the provisions of Section 44AA to avoid any penalties or legal issues.
This article is for informational purposes only and is based on the author’s interpretation of the relevant provision. It should not be taken as professional advice.
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