As a follow up to its November 8 decision to demonetize high-value currency, the authorities on Monday said small buyers and corporations with a turnover of up to Rs. 2 crores can pay much less tax in the event that they accept bills through banking and virtual manner.

"It's been determined to lessen the present price of deemed earnings of 8 percentage below section 44AD of the (income Tax) Act to six percentage in admire of the quantity of total turnover or gross receipts acquired via banking channel/digital means for the monetary 12 months 2016-17," the Union Finance Ministry stated.

Under the prevailing provision in case of certain assessees - and character, Hindu Undivided circle of relatives (HUF), or a partnership company apart from a constrained legal responsibility partnership - having a turnover of Rs. 2 crores or less, the income calculation for taxation purposes is deemed to be 8 percent of the whole turnover, the Ministry said in a release.

The imperative Board of Direct Taxes has taken this choice to aid the government's task of transferring in the direction of a much less cash economic system and to incentivise small businesses to proactively receive payments by using virtual way, the assertion stated.

However, the existing rate of deemed profit of eight percent noted in section 44AD of the Act shall hold to use in respect of general turnover or gross receipts obtained in cash," it delivered.
The Ministry stated the legislative amendments in this regard might be accomplished via the Finance bill, 2017.