benefit of lower tax rate of income tax on digital turnover for small businesses

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SECTION 44AD: Applicable to Individual,HUF,or Partnership (other than LLP) carrying on any business other than transportation, agency, brokerage & commission & having turnover of 2cr. & less, the profit deemed to be 8% of total turnover. Measures for promoting Digital payments & Creation of Less Cash Economy: BENEFIT OF LOWER TAX RATE OF INCOME TAX ON DIGITAL TURNOVER FOR SMALL BUSINESSES. PAY 85.71% (OR 46.15 LESS) MORE TAX BY NOT MIGRATING TO DIGITAL TRANSACTION. SMALL BUSINESSMEN WILL SAVE 85.71% OF TAX BY ADOPTING BANKING/DIGITAL CHANNEL TRANSACTION i. e. BY REJECTING NON-DIGITAL PAYMENTS FOR THE FINANCIAL YEAR 2016-17.

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Page 1: BENEFIT OF LOWER TAX RATE OF INCOME TAX ON DIGITAL TURNOVER FOR SMALL BUSINESSES

SECTION 44AD: Applicable to Individual,HUF,or Partnership

(other than LLP) carrying on any business other than

transportation, agency, brokerage & commission & having

turnover of 2cr. & less, the profit deemed to be 8% of total

turnover.

Measures for promoting Digital payments & Creation of Less

Cash Economy:

BENEFIT OF LOWER TAX RATE OF INCOME TAX ON DIGITAL

TURNOVER FOR SMALL BUSINESSES.

PAY 85.71% (OR 46.15 LESS) MORE TAX BY NOT MIGRATING

TO DIGITAL TRANSACTION.

SMALL BUSINESSMEN WILL SAVE 85.71% OF TAX BY ADOPTING

BANKING/DIGITAL CHANNEL TRANSACTION i. e. BY REJECTING

NON-DIGITAL PAYMENTS FOR THE FINANCIAL YEAR 2016-17.

Page 2: BENEFIT OF LOWER TAX RATE OF INCOME TAX ON DIGITAL TURNOVER FOR SMALL BUSINESSES

DIGITAL TRANSACTIONS INCLUDE PAYMENT RECEIVED BY CHEQUE OR THROUGH ANY OTHER DIGITAL

MEANS. IN THE FOLLOWING EXAMPLE, BENEFITS OBTAINED BY TRADERS & SMALL BUSINESSES IS

EXPLAINED IN 3 DIFFERENT SCENARIOS:

PARTICULARS 100% DIGITAL 100% CASH 60% DIGITAL

TURNOVER(Rs.) TURNOVER(Rs.) TURNOVER(Rs.)

Total Turnover 2 Crore 2 Crore 2 Crore

Cash Turnover NIL 2 Crore 0.80 Crore

Digital Turnover 2 Crore NIL 1.20 Crore

Profit on Turnover:

Cash 8% NIL 16.00 Lakh 6.40 Lakh

Digital 6% 12.00 Lakh NIL 7.20 Lakh

Total Profit 12.00 Lakh 16.00 Lakh 13.60 Lakh

Deduction u/s 80 C 1.50 Lakh 1.50 Lakh 1.50 Lakh

Taxable Income 10.50 Lakh 14.50 Lakh 12.10 Lakh

Tax Payable 1,44,200/- 2,67,800/- 1,93,640/-

Tax Saving 1,23,600/- NIL 74,160/-

Saving % 123600/144200*100=85.71% NIL 74160/193640*100=38.30% (Approx.)

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