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CA Intermediate · Taxation · Profits and Gains of Business or Profession

Meena Textiles, a proprietary trading business in Surat, opts for the presumptive scheme for eligible businesses for tax year 2026-27. Its total turnover is Rs 1,50,00,000, of which Rs 60,00,000 was received through account payee cheques and electronic modes within the prescribed time and Rs 90,00,000 was received in cash. Assuming it is eligible and declares the minimum income under the scheme, its business income is:

The business income is Rs 10,80,000. Under the presumptive scheme, 6% applies to digital receipts of Rs 60 lakh, giving Rs 3.6 lakh, and 8% applies to cash receipts of Rs 90 lakh, giving Rs 7.2 lakh. The two amounts add up to Rs 10.8 lakh.

  1. ARs 9,00,000
  2. BRs 10,80,000Correct
  3. CRs 12,00,000
  4. DRs 3,60,000

Explanation

Under the presumptive scheme, 6% of turnover received by digital or banking modes and 8% of other turnover is deemed income. Here 6% of 60,00,000 is 3,60,000 and 8% of 90,00,000 is 7,20,000, totalling 10,80,000. Applying 8% to everything gives 12,00,000, and 6% to everything gives 9,00,000. Both are wrong because the rates apply to separate parts of turnover.

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