Page 39 - Banking Finance MAY 2017

ARTICLE

PRESUMPTIVE

TAXATION

REGIME: A

RELIEF TO

TAXPAYERS

G overnment collects a bulky amount through taxa- What is presumptive income?

tion to meet its financial obligations. Taxation is
Since 1962 several amendments of far reaching nature have
the most significant source of revenue of govt.
been made in the income tax act 1961 by union budget
income tax, being a direct tax is an important tool
every year. Budget 2016 proposes to introduce presumptive
to achieve balanced development in socio -economic growth
taxation regime to bring small businessmen and professional
in the country. To achieve an adequate rate of tax receipts,
in to the tax net. Presumptive income of taxation means
Government needs to implement such simple and handsome
your income is calculated on assumption basis instead of
regulations which can be easily understood by an ordinary
accrual basis.
person.
Presumptive Income for business: Sec
Presumptive income scheme is an initiative for all businesses
and professions to make the tax procedure easy, so that 44AD
Government could get the tax from all those who are still Prior to A.Y 2011-12, Presumptive income was only appli-
out of reach to pay tax. cable to the business of civil constructions. From A.Y. 2011-
12 section 44AD was made applicable to all type of busi-
About the author nesses (except those specified). According to section 44AD,
Income of business would be assumed at 8% of total turn-
Tabassum Saifi over. Total turnover of business should be 1 Crore or less.
Commerce Lecturer The limit for turnover has been extended to 2 Crore or less
Sri Krishna Institute of Management by the budget 2016. Section 44 AD is applied to all except
and Science the business of plying, hiring and leasing of goods as these
Chandausi
have already been covered under section 44AE.

BANKING FINANCE | MAY | 2017 | 39

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