The Central Board of Direct Taxes ( CBDT ) has issued an advisory on presumptive taxation scheme for small taxpayers from the category of business and professionals as the due date of filing income tax to end on 31st July 2018.
The presumptive taxation scheme was introduced by the Income Tax Act as a means through which small taxpayers who perform tasks such as the auditing of accounts as well as maintaining account ledgers would receive some form of relief.
Any individual looking to avail of this scheme will be able to declare his or her total taxable income at a predefined rate, while obtaining relief from the cumbersome task of account maintenance and audit. For this purpose, the Income Tax Act has introduced two types of presumptive taxation schemes under sections 44AD and 44AE of the Income Tax Act.
Under the normal provisions of the Income Tax Act, any taxable income received from business is calculated following the deduction of any expenditure that has been deemed to be deductible according to the guidelines of the Income Tax Act, as well as the disallowance of any expenditure that has been deemed unfit to be deductible according to the guidelines of the Income Tax Act.
However, the persons who opt for the scheme can enjoy certain benefits such as, there won’t be any requirement to keep book of accounts. For individuals, HUFs and partnerships having less than turnover of 2 crores, business income will be computed by taking 8 percent of the gross receipts or total turnover. In cases where amount received by account payee cheques/ drafts or through digital transactions, only 6 percent will be taken as income. This will be considered to be the business’ final and absolute taxable income, and no additional expenditure will be considered.
In case of professionals having turnover less than 50 lakh, only 50 percent of the gross receipts will be taken for computation of income under the scheme.
Further, in case of persons engaged in plying, hiring or leasing of goods carriages, Rs.7500 per goods carriages per month will be deemed as their income. However, this is subject to a maximum limit of 10 goods carriages.
