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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Tax Provisions for Special Cases

Mr. Nair, a resident individual, has a business with a turnover of Rs 1.5 crore, 100% of receipts through banking channels. He opts for the presumptive scheme for small businesses (Section 44AD) declaring profit at 6% of turnover. Assuming the presumptive rate applicable to digital receipts and no other business income, what profit is he deemed to earn?

The deemed profit is Rs 9,00,000. Under the presumptive scheme, receipts through banking or digital channels are taxed at 6% of turnover, and 6% of Rs 1.5 crore equals Rs 9 lakh. Using the 8% cash rate would wrongly give Rs 12 lakh.

  1. ARs 9,00,000Correct
  2. BRs 12,00,000
  3. CRs 7,50,000
  4. DRs 15,00,000

Explanation

Under Section 44AD, profit is presumed at 8% of turnover, or 6% for receipts via banking or digital modes. Here all receipts are digital, so profit is 6% of Rs 1.5 crore, which is Rs 9,00,000. Rs 12,00,000 wrongly applies 8% to the whole turnover.

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