Measures for promoting digital payments in case of small unorganized
businesses -
The existing provisions of section 44AD of the
Act, inter-alia, provides for a presumptive income scheme in case of eligible
assesses carrying out eligible businesses.
Under this scheme, in case of an
eligible assessee engaged in eligible business having total turnover or gross
receipts not exceeding two crore rupees in a previous year, a sum equal to
eight (8) per cent of the total turnover or gross receipts, or, as the case may be,
a sum higher than the aforesaid sum declared by the assessee in his/her return of income,
is deemed to be the profits and gains of such business chargeable to tax under
the head “profits and gains of business or profession“.
In order to promote digital transactions and to
encourage small unorganized business to accept digital payments, it is proposed
to amend section 44AD of the Act to reduce the existing rate of deemed total
income of eight per cent. to six (6) per cent in respect of the amount of such
total turnover or gross receipts received by an account payee cheque or account
payee bank draft or use of electronic clearing system through a bank account
during the previous year or before the due date specified in sub-section (1) of
section 139 in respect of that previous year.
However, the existing rate of
deemed profit of 8% referred to in section 44AD of the Act, shall continue to
apply in respect of total turnover or gross receipts received in any other
mode. This amendment will take effect from 1st April, 2017 and will,
accordingly , apply in relation to the assessment year 2017-18 and subsequent
years. [Clause 21]
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