The action is aimed at ensuring that small businesses receive payments from customers promptly.
As per the existing rules, companies with sales up to Rs. 2 crore may sign up for estimated taxation.
Union Finance Minister Nirmala Sitharaman suggested raising the limit of presumptive taxes for professionals and micro businesses on the budget day. Presenting the budget for FY2023-24, the minister suggested raising the income threshold from Rs 50,000 to Rs 75,000 for professionals and small businesses to qualify for the presumptive taxation programme.
presumptive income plan
Businessmen and professionals must maintain regular books of accounts following the Income Tax Act of 1961. Additionally, they need to file income tax reports and audit their finances (ITR). However, the Presumptive Taxation Scheme (PTS) was developed to provide relief to small taxpayers.
As per the existing rules, companies with sales up to Rs. 2 crore can sign up for presumptive taxation, wherein 6% or 8% of their gross receipts will be considered as their income, subject to certain conditions.
Micro, small and medium-sized enterprises (MSMEs), according to Sitharaman, are the backbone of our expanding economy. Micro businesses with annual revenue up to Rs 2 crore and certain professionals with annual revenue up to Rs 50 lakh can benefit from presumptive taxes. For taxpayers having cash receipts above 5%, the FM has suggested giving them an enhanced limit of Rs 3 crore and Rs 75,000 respectively.
The budget has suggested that deduction of expenses incurred on payments made to MSMEs be allowed only when the payment is actually made to encourage MSMEs in timely receipt of payments. The action is aimed at ensuring that small businesses receive payments from customers promptly. Previously, the government mandated that major corporations inform small enterprises about any payment delays.
According to Sitharaman, the Income Tax Department has continuously worked to enhance taxpayer services by facilitating simple and straightforward compliance. For professionals, the earnings and profits from the business are considered to be equal to 50% of the gross receipts.
According to the memorandum outlining the provisions of the Finance Bill, 2023, suggestions have been received to increase the eligibility limit for eligible businesses and professions to avail the benefits of the schemes projected to help more people in the small and medium sectors. To facilitate compliance and encourage non-cash transactions, it was suggested that border restrictions be increased.
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