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

Ramesh, a resident individual, runs a retail trading business (not a specified profession, no commission or agency income). His total turnover for the tax year is Rs 1,50,00,000, and all of it was received through account payee cheques and online banking. He claims no deduction under Chapter VIII-C. Under the presumptive scheme in section 58 of the Income-tax Act, 2025, what is the minimum profit deemed to be earned (assuming he does not claim a lower profit)?

The deemed profit is Rs 9,00,000. Since the whole turnover of Rs 1.5 crore was received by banking or online mode, the 6% rate under section 58 applies to all of it. The higher 8% rate covers only receipts in other modes, such as cash.

  1. ARs 9,00,000Correct
  2. BRs 12,00,000
  3. CRs 7,50,000
  4. DRs 10,50,000

Explanation

All receipts came through specified banking or online mode, so the 6% rate applies to the full turnover: 6% x 1,50,00,000 = Rs 9,00,000. The 8% rate (Rs 12,00,000) applies only to receipts not received by banking or online mode, so it is wrong here.

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