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20
December 2016
As a follow up to its November 8
decision to demonetise high value currency, the government on Monday said small
traders and businesses with a turnover of up to Rs 2 crore will pay less tax if
they accept payments through banking and digital means. The Total Investment & Insurance Solutions
"It has been decided to reduce the
existing rate of deemed profit of 8 per cent under section 44AD of the (Income
Tax) Act to 6 per cent in respect of the amount of total turnover or gross
receipts received through banking channel/digital means for the financial year
2016-17," the Union Finance Ministry said.
Under the existing provision in case of
certain assessees -- an individual, Hindu Undivided Family (HUF), or a
partnership firm other than a limited liability partnership -- having a
turnover of Rs 2 crore or less, the profit calculation for taxation purposes is
deemed to be 8 per cent of the total turnover, the Ministry said in a release. The Total Investment & Insurance
Solutions
The Central Board of Direct Taxes has
taken this decision to aid the government's mission of moving towards a less
cash economy and to incentivise small businesses to proactively accept payments
by digital means, the statement said.
The Total Investment & Insurance Solutions
"However, the existing rate of
deemed profit of 8 per cent referred to in section 44AD of the Act, shall
continue to apply in respect of total turnover or gross receipts received in
cash," it added.
The Ministry said the legislative
amendments in this regard would be carried out through the Finance Bill, 2017.The Total Investment & Insurance
Solutions
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