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

Mr. Harsh Vora, a resident individual, runs a trading business in Surat and has opted for the presumptive scheme for small businesses for tax year 2026-27. His total turnover is ₹80,00,000, of which ₹50,00,000 was received through account payee cheques and electronic modes and ₹30,00,000 in cash. Assuming he satisfies every condition of the scheme, his presumptive business income is:

The presumptive income is ₹5,40,000. The scheme taxes 6% of turnover received digitally (₹3,00,000) and 8% of turnover received in cash or other modes (₹2,40,000). Adding the two gives ₹5,40,000. Applying one rate to the whole turnover would be incorrect.

  1. A₹5,40,000Correct
  2. B₹6,40,000
  3. C₹4,80,000
  4. D₹4,20,000

Explanation

Digital receipts are taxed at 6%: 6% of ₹50,00,000 = ₹3,00,000. Cash receipts are taxed at 8%: 8% of ₹30,00,000 = ₹2,40,000. Total is ₹5,40,000. Applying 8% to the entire turnover gives ₹6,40,000, which wrongly ignores the lower rate for digital receipts.

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