As per the press release on 19th of December
2016
Measures for Promoting Digital Payments & Creation
of Less-Cash Economy
Under the existing
provisions of section 44AD of the Income-tax Act, 1961 (the Act), in case
of certain assesses (i.e. an individual, HUF or a partnership firm other than
LLP) carrying on any business (other than transportation, agency, brokerage and
commission) and having a turnover of
Rupees Two Crore or less, the profit is deemed to be 8% of the total turnover.
In order to
achieve the Government’s mission of moving towards a less cash economy and to incentivise small traders / businesses to
proactively accept payments by digital means, it has been decided to reduce the existing rate of deemed profit
of 8% under section 44AD of the Act to 6% in respect of the amount of total
turnover or gross receipts received through banking channel / digital means for
the financial year 2016-17. However, the existing rate of deemed profit of 8% referred to in
section 44AD of the Act, shall continue
to apply in respect of total
turnover or gross receipts received in cash.
Legislative
amendment in this regard shall be carried out through the Finance Bill, 2017
