Presumptive Taxation Scheme for Enterprise and Professionals


Sustaining books of accounts is a expensive and time-consuming course of for companies and professionals. The federal government has launched the presumptive taxation scheme to make tax compliance simpler. Beneath the scheme, eligible enterprise professionals can file returns at a prescribed fee with out sustaining their books of accounts.

What’s the Presumptive Taxation Scheme?

In keeping with the IT Act, companies and professionals should preserve books of accounts. Earlier than submitting their tax returns, they need to additionally get their accounts audited.

The audit report also needs to be submitted when submitting tax returns. However this is usually a burden for smaller companies and professionals. The federal government launched the Presumptive Taxation Scheme (PTS) from FY 2016-17 to make tax compliance simpler for such taxpayers.

Beneath this scheme, eligible taxpayers can file returns at a prescribed fee, eliminating the necessity to preserve books of accounts often. However for turnover calculation, some accounts nonetheless have to be maintained.

What’s the Tax Price Beneath PTS?

The PTS was launched below Part 44 of the IT Act. It’s divided into three sections: Part 44AD, Part 44ADA, and Part 44AE, for various enterprise {and professional} classes. Right here’s what these sections imply.

Part 44AD

Companies with a turnover of lower than Rs. 2 crores in a monetary yr can go for the scheme. Eligible companies choosing PTS should declare income @6% of their digital transactions and @8% of the non-digital transactions, whichever is relevant. Resident people, resident partnerships, and resident HUFs who haven’t claimed profit-linked deductions can go for PTS below Part 44AD.

Part 44ADA

Professionals concerned in fields corresponding to authorized, engineering, medical, accountant, inside designing, structure, and so forth., can go for PTS below Part 44ADA. Beneath the scheme, eligible professionals with income lower than Rs. 50 lakhs in a monetary yr, the income are presumed at 50% of the gross earnings.

Part 44AE

Small companies engaged in hiring, leasing, or plying items carriages and never having greater than ten carriage automobiles can go for PTS below Part 44AE. All of the eligible assesse like people, partnership companies, and HUFs can go for the scheme. The earnings of the eligible assesse can be calculated as Rs. 7,500/month/car.

What are Some Different Necessary Issues About PTS?

Listed below are a number of different issues to learn about PTS:

  • Assesses choosing PTS should pay 100% of the presumptive earnings tax as advance tax by fifteenth March yearly.
  • If the earnings is filed below Part 44AD, the assesse ought to use the identical methodology for at the very least 5 years. Nevertheless, there aren’t any such restrictions below Part 44ADA and Part 44AE.
  • Common books of accounts ought to be maintained if the eligible assesse wish to declare a decrease revenue than what’s prescribed as per PTS.
  • Companies ought to use on-line ITR Type 3 or Type 4, as per the eligibility for submitting returns below PTS.

Tax Compliance Made Simpler with Presumptive Taxation Scheme

Eligible taxpayers can benefit from the PTS scheme to remove bookkeeping hassles and scale back their tax liabilities. However it’s important to totally perceive the provisions below numerous sections of the IT Act to make the most effective use of the presumptive scheme.

Seek the advice of a tax skilled to know extra in regards to the scheme and be sure that your tax returns are filed appropriately with none errors.

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