Finance minister Arun Jaitley on Tuesday (20.12.2016) said the government’s decision to tweak the presumptive income norms would reduce the tax liability by up to 30 per cent for those small traders opting for digital transactions.
- Small traders and businessmen, with turnover of up to Rs 2 crore can now save tax if they choose to go digital.
- It would also achieve the government’s mission of moving towards a less cash economy
- The decision has been taken to incentive’s small traders/businesses to proactively accept payments by digital means.
He said in the Budget for 2016-17, small traders and businessmen, with turnover of up to Rs 2 crore who did not maintain proper accounts, were presumed to have earned 8 per cent income or profit for tax purposes. But if they use digital mode of payments, their income will now be presumed to be 6 per cent of the turnover and not 8 per cent.
Under the existing Section 44AD of the Income-Tax Act, 1961, in case of certain assessees (an individual, HUF or a partnership firm other than LLP) carrying on any business having a turnover of Rs 2 crore or less, the profit is deemed to be 8 per cent of the total turnover for taxation.