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CMA Intermediate · Direct and Indirect Taxation · Profits and Gains of Business or Profession

Meera, a resident individual, is an eligible assessee with business turnover of Rs. 2,80,00,000 in the tax year. Cash receipts were Rs. 12,00,000 and the rest came through specified banking or online mode. Under section 58, is she eligible for presumptive computation of profits at the rates in Sl. No. 1 of the Table?

Yes, she is eligible. Turnover of Rs. 2.80 crore is above Rs. 2 crore but within Rs. 3 crore, and cash receipts of Rs. 12 lakh are below 5% of turnover (Rs. 14 lakh), so the extended limit condition is satisfied.

  1. ANo, because turnover exceeds Rs. 2 crore and no relaxation applies
  2. BYes, because turnover is up to Rs. 3 crore and cash receipts do not exceed 5% of turnoverCorrect
  3. CNo, because cash receipts exceed 5% of turnover
  4. DYes, but only if turnover is up to Rs. 2 crore

Explanation

The limit extends to Rs. 3 crore where cash receipts do not exceed 5% of turnover. 5% of Rs. 2.80 crore = Rs. 14,00,000. Cash of Rs. 12,00,000 is below this, so she qualifies. Saying she is ineligible ignores the extended limit.

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