Govt is luring traders with 46% tax savings to push them towards digital payments
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The Indian Government wants small traders to move to digital payments as soon as possible and is luring them with 46% tax savings. This is possible as the Centre has decided to tweak presumptive income norms that will reduce tax liability.
"Apart from making a tax saving of almost 46 per cent by migrating to banking mode, the small businesses would be able to build their books which may also help them get bank loans easily," the finance ministry said in a statement.
Other benefit of going for digital payments is that if transactions are carried out through banking channels, then anybody having annual turnover up to Rs 66 lakhs will have zero tax liability after availing the benefit of Section 80C, after amendment of this new rate structure.
"The object is if you do transactions using digital mode then you can pay less tax. It is a tax incentive to support digitisation of the economy. And if we calculate it, then some traders would get over 30 per cent tax advantage if he transacts through digital mode," saidFinance Minister Arun Jaitley.
Under the existing Section 44AD of the Income-Tax Act, 1961, in case of certain assessees (an individual, HUF or a partnership firm other than LLP) carrying on any business having a turnover of Rs 2 crore or less, the profit is deemed to be 8% of the total turnover for taxation.
Jaitley cleared that in the Budget for 2016-17, small traders and businessmen, with turnover of up to Rs 2 crore who did not maintain proper accounts, were presumed to have earned 8% income or profit for tax purposes. But if they use digital mode of payments, their income will now be presumed to be 6% of the turnover and not 8%.
After the decision to demonetise old Rs 500/1,000 notes, the government has taken several measures to encourage digital payments to promote less cash economy.
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"Apart from making a tax saving of almost 46 per cent by migrating to banking mode, the small businesses would be able to build their books which may also help them get bank loans easily," the finance ministry said in a statement.
Other benefit of going for digital payments is that if transactions are carried out through banking channels, then anybody having annual turnover up to Rs 66 lakhs will have zero tax liability after availing the benefit of Section 80C, after amendment of this new rate structure.
"The object is if you do transactions using digital mode then you can pay less tax. It is a tax incentive to support digitisation of the economy. And if we calculate it, then some traders would get over 30 per cent tax advantage if he transacts through digital mode," said
Under the existing Section 44AD of the Income-Tax Act, 1961, in case of certain assessees (an individual, HUF or a partnership firm other than LLP) carrying on any business having a turnover of Rs 2 crore or less, the profit is deemed to be 8% of the total turnover for taxation.
Advertisement
After the decision to demonetise old Rs 500/1,000 notes, the government has taken several measures to encourage digital payments to promote less cash economy.
Advertisement
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