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Presumptive Taxation Scheme for Enterprise and Professionals


Dec 27, 2021


Sustaining books of accounts is a pricey and time-consuming course of for companies and professionals. The federal government has launched the presumptive taxation scheme to make tax compliance simpler. Below 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 line with the IT Act, companies and professionals should keep books of accounts. Earlier than submitting their tax returns, they need to additionally get their accounts audited.

The audit report must also be submitted when submitting tax returns. However this generally is 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.

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

What’s the Tax Fee Below PTS?

The PTS was launched underneath 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 earnings @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 underneath Part 44AD.

Part 44ADA

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

Part 44AE

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

What are Some Different Vital Issues About PTS?

Listed here are just a few different issues to learn about PTS:

  • Assesses choosing PTS should pay 100% of the presumptive revenue tax as advance tax by fifteenth March yearly.
  • If the revenue is filed underneath Part 44AD, the assesse ought to use the identical technique for no less than 5 years. Nevertheless, there are not any such restrictions underneath Part 44ADA and Part 44AE.
  • Common books of accounts must be maintained if the eligible assesse want 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 underneath PTS.

Tax Compliance Made Simpler with Presumptive Taxation Scheme

Eligible taxpayers can reap the benefits of the PTS scheme to remove bookkeeping hassles and scale back their tax liabilities. However it’s important to completely perceive the provisions underneath varied 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 certain that your tax returns are filed appropriately with none errors.

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