 "Presumptive taxation: Compliance route eased for small biz")
Finance Minister Arun Jaitley has proposed to widen the presumptive taxation regime's ambit, to ease the compliance burden on professionals.
The fields of legal, medical, engineering, architecture, accountancy, technical consultancy and interior decoration are among those which may avail of this regime.
Tax experts welcomed this. Archit Gupta, founder and chief executive, Cleartax.in, said: "Professionals will no longer have to maintain cumbersome books of account or be subject to complicated audit requirements."
A presumptive profitability of 50% seems to be on the higher side for professionals, say experts
Only professionals whose gross receipts from a profession do not exceed Rs 50 lakh in the previous year may avail of this window. Such professionals will be able to declare 50 per cent of their total receipts as income.
Individuals, Hindu Undivided Families and partnership firms (but not limited liability partnership ones) will be able to avail of this scheme through a Section 44ADA. Until now, only small business owners were allowed to avail of the benefit of presumptive taxation.
The Budget proposes to raise the turnover limit under Section 44AD of the Income Tax Act to Rs 2 crore, from Rs 1 crore, bringing big relief to a large number of assessees in the micro, small & medium enterprises category.
Under the new scheme, a professional may consider half the gross receipts as income. If a professional has gross receipts of Rs 50 lakh in a year, he may take Rs 25 lakh as income and pay tax according to the applicable slab rate.
Suresh Surana, founder of RSM Astute Consulting Group, said: "The presumptive income of 50 per cent seems to be on the higher side for professionals, in view of increasing salaries and other professional costs." Others differed. "The 50 per cent rate does not seem to be too high, in view of the fact that professionals don't have raw material and other costs. They will also be able to save, as they will not be required to maintain books and pay for auditing," said Alok Agrawal, partner, Deloitte Haskins and Sells.
However, a word of caution. "Once you take the presumptive tax route, it will not be easy to change the mode of tax calculation," said Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors. "Before a professional embarks on this route, he should go through the fine print and also hold a consultation with a tax expert."
There is an option for professionals who wish to declare profitability lower than 50 per cent of gross receipts and also wish to claim depreciation. They may continue to take the earlier route, of maintaining books and getting these audited.
The fields of legal, medical, engineering, architecture, accountancy, technical consultancy and interior decoration are among those which may avail of this regime.
Tax experts welcomed this. Archit Gupta, founder and chief executive, Cleartax.in, said: "Professionals will no longer have to maintain cumbersome books of account or be subject to complicated audit requirements."
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Only professionals whose gross receipts from a profession do not exceed Rs 50 lakh in the previous year may avail of this window. Such professionals will be able to declare 50 per cent of their total receipts as income.
Individuals, Hindu Undivided Families and partnership firms (but not limited liability partnership ones) will be able to avail of this scheme through a Section 44ADA. Until now, only small business owners were allowed to avail of the benefit of presumptive taxation.
The Budget proposes to raise the turnover limit under Section 44AD of the Income Tax Act to Rs 2 crore, from Rs 1 crore, bringing big relief to a large number of assessees in the micro, small & medium enterprises category.
Under the new scheme, a professional may consider half the gross receipts as income. If a professional has gross receipts of Rs 50 lakh in a year, he may take Rs 25 lakh as income and pay tax according to the applicable slab rate.
Suresh Surana, founder of RSM Astute Consulting Group, said: "The presumptive income of 50 per cent seems to be on the higher side for professionals, in view of increasing salaries and other professional costs." Others differed. "The 50 per cent rate does not seem to be too high, in view of the fact that professionals don't have raw material and other costs. They will also be able to save, as they will not be required to maintain books and pay for auditing," said Alok Agrawal, partner, Deloitte Haskins and Sells.
However, a word of caution. "Once you take the presumptive tax route, it will not be easy to change the mode of tax calculation," said Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors. "Before a professional embarks on this route, he should go through the fine print and also hold a consultation with a tax expert."
There is an option for professionals who wish to declare profitability lower than 50 per cent of gross receipts and also wish to claim depreciation. They may continue to take the earlier route, of maintaining books and getting these audited.