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6% income for 44ad

22 April 2017

6% IS CALCULATED FOR SALES WHOSE PAYMENT IS RECEIVED IN MODE OTHER THAN CASH. BUT THE SALE HAS BEEN MADE ON CREDIT AND PAYMENT HAS YET TO BE RECEIVED AND COULD BE RECEIVED IN CASH AFTER BALANCE SHEET DATE. HOW TO CALCULATE THEN?

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2 Replies

Manish Manu (198 Points)
Replied 23 April 2017

Dear Monty,

The provision related to 6% states as:

Provided that this sub-section shall have effect as if for the words "eight per cent", the words "six per cent" had been substituted, in respect of the amount of total turnover or gross receipts which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account during the previous year or before the due date specified in sub-section [1] of section 139 in respect of that previous year.

So, as per the provision, total turnover should be received via account payee cheque or draft or electronically. In case debtors are outstanding as on balance sheet, you can wait upto return filing due date as the provision specifically states for amount received during the year or before due date of filing of return u/s 139(1).

If the amount from debtors is outstanding even after due date of filing of return or amount is received in cash, then rate of 8% is applicable instead of 6.