Sunday, March 3rd, 2024

More income tax exemption for doctor-engineer in Budget 2023! How to take advantage of Presumptive Scheme, new rules implemented


Highlights:

For businesses coming under section 44AD, the limit has been increased to Rs 3 crore.
For professionals covered under 44ADA, the limit has been raised to Rs 75 lakh.
This scheme is specially made for small and medium businessmen and professionals.

New Delhi. general budget (Budget 2023) In the income tax front, a big relief has been given to the middle class, as well as the government has given a big gift to businessmen and some other professionals by increasing the limit in the ‘Presumptive Income Scheme’. In this scheme, a business run by an individual, partnership firm or HUF gets the option to pay tax on it according to the turnover limit mentioned in the relevant section.

In the presumptive income scheme, there is no need to maintain the account in detail and audit the account at the end of the year. Section 44AD/44ADA of the Income Tax Act includes the provisions of this scheme.

What is Presumptive Income Scheme
Every job profession, businessman and other professionals have to pay income tax. Although, the income of a salaried person is clearly visible, but the income of a business or other professional is not the same. These professionals include private practicing doctors, engineers, chartered accountants, technical consultants, interior decorators, lawyers and other professionals, all of whom are covered under the presumptive income scheme.

Read this also – Relief! Taxpayers can get a discount of 50 thousand without doing anything in the New Tax Regime, know how

According to the Income Tax Act, if you do any business or profession, then you are also required to keep books of accounts in relation to it. But for some businessmen who do business on a small scale, it is not possible for them to do so. Keeping this problem in mind, in the Income Tax Act, small businessmen were given the facility to adopt a scheme, which is known as Presumptive Taxation Scheme.

Cannot tell profit less than minimum limit
This is a simple tax scheme specially designed for small and medium businessmen and professionals. In this, all professionals are not required to maintain books of account and get them audited under the general provisions of the Income Tax Act.

There is a minimum limit in this scheme, less than that you cannot declare your profit. If your profit exceeds these minimum limits, then you can declare it in your income and pay tax on it. That is, you cannot report your income less than the minimum limit prescribed in this scheme. At the same time, there is no limit on declaring more income. The rates for computing net profit from business or profession in the presumptive income scheme are 50 per cent under section 44ADA and 6 to 8 per cent in section 44AD.

Also read- Will all employees get the benefit of standard deduction? Now the situation is clear, you will also be shocked to hear the answer of CBDT

Relief with conditions in the budget
In Budget 2023, Finance Minister Nirmala Sitharaman has announced to increase the limit of Presumptive Income Scheme. Now for businesses coming under section 44AD, the current limit has been increased from Rs 2 crore to Rs 3 crore. At the same time, for professionals covered under 44ADA, the limit has been increased from Rs 50 lakh to Rs 75 lakh. Necessary conditions have also been kept for availing the new limit of turnover.

The first condition is that the total amount received in the form of cash should not exceed 5% of the total gross receipts. On the other hand, those checks which are not account payee under the second condition will be treated as cash receipts under these sections.

The new limit of turnover in the Presumptive Income Scheme will be applicable from the assessment year 2024-25 and from the financial year 2023-24. The proposed change in limit will benefit those taxpayers who do not want to maintain books of accounts or want to reduce the burden of compliance.

Tags: budget 2023, FM Nirmala Sitharaman, income tax, income tax planning, save money

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