Business Mantra News
Ministry of Finance, Government of India has decided to amend section 44 AD. Presently for A.Y. 2016 – 17, Section 44 AD provides for profit on presumptive basis (8% or more) for turnover up to 2.00 crores. If profit declared is less than 8% then the business entity has to get its books audited by a practicing Chartered Accountant.
Now Government has said that for the part of turnover received through banking or digital mode the presumptive profit rate would be 6% in place of 8%. For part of turnover received in cash it would be same 8%.
It means there would be a relaxation of 25 % (as profit may be shown 6% instead of 8%) in income tax for businesses with turnover up to 2 crores. This is a welcome change as it would promote cash less transactions among shopkeepers or traders and manufacturers. But what would be the rate for part of turnover which is on credit and payment has not been received till the financial year ends.