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TMI BlogMeasures for Promoting Digital Payments & Creation of Less-Cash Economy: Benefit of lower rate of Income Tax on digital turnover for small businessesX X X X Extracts X X X X X X X X Extracts X X X X ..... Measures for Promoting Digital Payments & Creation of Less-Cash Economy: Benefit of lower rate of Income Tax on digital turnover for small businesses - News and Press Release Dated:- 21-12-2016 - News - The benefit of lower rate of Income-tax on digital turnover for small businesses up to a turnover of ₹ 2,00,000,00 (Rupees Two Crore), announced by the Government yesterday under Section 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4AD of the Income-tax Act, 1961 is a huge benefit given to businessmen for promoting digital/banking transactions. The benefits given are explained in the following paragraph. If a trader makes his transactions in cash on a turnover of Rs.Two Crore, then his income under the presumptive scheme will then be presumed to be ₹ 16 lakhs @ 8% of turnover. After availing of ₹ 1.5 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deduction under Section 80C, his total tax liability will be ₹ 2,67,800/-. However, if he shifts to 100% digital transactions under the new announcement made, his profit will be presumed to be at ₹ 12 lakhs @ 6% of turnover, and after availing of ₹ 1.5 lakhs under Section 80C, his tax liability now will be only ₹ 1,44,200/. Here, digital transaction includes payment re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by Cheque or through any other digital means. In the following example, the benefit obtained by traders and small businesses is explained in 3 different scenarios: Particulars 100% Cash Turnover (Rs.) 60% Digital Turnover (Rs.) 100% Digital Turnover (Rs.) Total Turnover 2 Crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Core 2 Crore Cash Turnover 2 Crore 0.80 Crore NIL Digital Turnover NIL 1.2 Crore 2 Crore Profit on Cash Turnover @ 8% 16 Lakh 6.40 Lakh NIL Prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it on Digital turnover @ 6% NIL 7.20 Lakh 12 Lakh Total Profit 16 Lakh 13.60 Lakh 12 Lakh Deduction u/s 80C 1.5 Lakh 1.5 Lakh 1.5 Lakh Taxable Income 14.50 Lakh 12.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lakh 10.50 Lakh Tax Payable 2,67,800 1,93,640 1,44,200 Tax Saving NIL 74,160 1,23,600 Apart from making a tax saving of almost 46% by migrating to banking mode, the small businesses would be able to build their books whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h may also help them get bank loans easily. Also, if transactions are carried out through banking channels, then anybody having annual turnover up to ₹ 66 lakhs will have zero tax liability after availing the benefit of Section 80C , after amendment of this new rate structure. - News - Press release - PIB Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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