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To promote a “less cash” society, the Finance Ministry on Monday announced that it would provide tax incentives to small traders accepting payments through digital mode.
“It has been decided to reduce the existing rate of deemed profit of 8 per cent to 6 per cent for the amount of total turnover or gross receipts received through banking channel or digital means for the financial year 2016-17,” it said.
Under section 44AD of the Income-tax Act, 1961,for certain assessees carrying on any business (other than transportation, agency, brokerage and commission) and having a turnover of up to ₹2 crore, the profit is deemed to be 8 per cent of the total turnover.
The Ministry said the required legislative amendment will be carried out in the Finance Bill 2017 which will be tabled with the Union Budget 2017-18.
It however, said the existing rate of deemed profit of 8 per cent will continue to apply on total turnover or gross receipts received in cash.
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