Special provision from commutating the profit and gains of business profession on preventive Basis in case of non-resident
The provision of section 44 AD , 444ADA and 44 E appearing the Income tax Act 1961 has been clubbed under Section 58 of the Income tax Bill 2025. Thus made it easy to understand the law on presentive basis . As per clause 2 of Section 58 in Table column D it is has been mentioned a) Does not exceeds Rs 2,00,00,000/- or b) does not exceeds Rs,3,00,00,000/- , where the amount of aggregate of the amount received , in cash , does not exceed 5% of the total turnover or gross receipt. As per Colom ‘E’
A. (i) 6% of the total turnover or gross receipts realised in specified banking or on-line mode : and
(ii) 8% of the total turnover or gross receipts realised in any other mode other than specified Banking or online mode : or
B) Profit claimed to have actually earned .
If the assessee claims the provision of section 58, he does not require to maintain any books of accounts .In case he does not claim the income of presumptive basis he has to main regular books of Account and other documents as required under section 62(2) and get his financial accounts audited and furnish an audit report as such required under section 63 .
As pre the provision of sub section (6) the written down value of any assets used for the purpose of species business or profession shall be computed as if the assessee mentioned in column D of the Table in sub section (2) has been claimed and was actually allowed the depreciation thereon for each of the relevant tax year.
Now to verify whether the profit claimed to have been actually higher than the calculation of the profit shall be calculated as the profit as per the provision of item A(i) or (ii) of Column ‘E’ of the Table 2 to Section 58 of the Act plus the deemed amount of Depreciation allowed . If the total utilisation of funds by the assessee is less than this amount as calculated above it will be treated as per the amount is not higher than the amount as declared in accordance with the clause (A).
Under the new provision as per sub section 5 of Section 58 . the purposes of sub-section (2) (Table: Sl. No. 2), where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in section 35(f). This provision was withdrawn by the Finance Act 2016 (28 0f2016 w.e.f. 1-4-2017. This proposal will give incentive to opt the provision of presentive taxation in case of firm.
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CA R S Bansal, FCA, CCAA, FAFD, IP (M N 013000), is a Partner at R Bansal & Co., Chartered Accountants, Chandigarh – 160015.
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