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Under section 44ADA, a resident individual engaged in the legal profession with gross receipts of Rs 40 lakhs may declare presumptive income equal to:
A8 per cent of the gross receipts
B6 per cent of the gross receipts
C50 per cent of the gross receipts
D30 per cent of the gross receipts
Answer & Solution
Correct answer: C. 50 per cent of the gross receipts
1. Section 44ADA covers residents (individuals and firms other than LLPs) in professions specified under section 44AA(1), which includes the legal profession.
2. It applies when gross receipts do not exceed Rs 50 lakhs (Rs 75 lakhs where cash receipts are at most 5% of total receipts); Rs 40 lakhs qualifies.
3. Presumptive income is 50% of gross receipts, or a higher sum actually earned.
4. The 8%/6% rates in options A and B belong to section 44AD for eligible businesses, not professions.
_Source: ICAI CA Inter P3(A) Income-tax SM (May 2026), Ch 3 Unit 3 PGBP, PDF p. 121_
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