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CS Executive · Tax Laws and Practice · Profits and Gains from Business and Profession

Anita, an eligible assessee, declared profit under section 58(2) (Sl. No. 1) for a tax year. In the next tax year she declared profit lower than the presumptive amount in contravention of the section. Under section 58(7) and (8), what is the consequence?

Anita becomes ineligible for the presumptive scheme for five tax years after the year of default, and if her total income exceeds the maximum amount not chargeable to tax, she must keep books under section 62 and get an audit under section 63.

  1. AShe is barred from the scheme for five subsequent tax years, and if total income exceeds the basic exemption limit she must maintain books and get auditedCorrect
  2. BShe is barred for one tax year only and need not maintain books
  3. CShe is barred permanently from the scheme but needs no audit
  4. DShe loses the scheme only if her turnover also exceeds Rs. 3 crore

Explanation

Section 58(7) makes her ineligible for five tax years subsequent to the year in which profit was not declared as required. Section 58(8) then requires books and audit if total income exceeds the maximum amount not chargeable to tax. The one-year bar and the permanent bar are not what the text provides.

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