Computing profits and gains of business on presumptive basis: Clause 58 of the Income Tax Bill, 2025 vs. Section 44AD of the Income-tax Act, 1961

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... fits and gains of business or profession on presumptive basis in case of certain residents. Income Tax Bill, 2025 Introduction The Income Tax Bill, 2025, introduces Clause 58, a statutory provision that aims to simplify the computation of profits and gains for certain businesses and professions by allowing a presumptive taxation scheme. This clause is significant as it seeks to reduce the compl .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ase. Detailed Analysis Key Provisions of Clause 58 1. Scope and Applicability: Clause 58 applies to specified businesses or professions with a turnover or gross receipts not exceeding specified limits. It excludes businesses such as plying, hiring, or leasing goods carriages and certain professions. 2. Presumptive Income Calculation: For businesses other than those excluded, the presumptive .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... in eligible businesses. - Section 44AD: Similarly applies to individuals, HUFs, and partnership firms (excluding LLPs) but with a broader definition of eligible business. 2. Turnover Threshold: - Clause 58: Sets a threshold of Rs. 2 crore, extendable to Rs. 3 crore if cash receipts do not exceed 5%. - Section 44AD: Initially set at Rs. 2 crore, with similar provisions for cash receipt limits. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... lause 58 is expected to simplify tax compliance for small businesses and professionals, reducing the need for detailed bookkeeping and audits. It encourages digital transactions by offering a lower presumptive rate for such receipts, aligning with the government's digital economy initiatives. However, businesses must carefully evaluate their eligibility and the implications of the lock-in peri .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... nt economic and technological trends. Future reforms could focus on further expanding the scope of eligible businesses and refining compliance mechanisms to enhance the scheme's effectiveness.   Full Text: Clause 58 Special provision for computing profits and gains of business or profession on presumptive basis in case of certain residents.
TMI Short Notes , Experts comment, opinio .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X