Bank channel & other mode under 44ad

Segregation of digital receipts and other receipts under presumptive taxation scheme

[ITR 4]

1. As per the presumptive taxation scheme under Section 44AD, 8% of gross receipts or turnover will be deemed as income of the taxpayer. However, in 2017 Union Budget such limit has been proposed to be reduced to 6% for digital receipts of taxpayer.

2. In new ITR form, new columns have been inserted to show turnover received through digital mode. Consequently, columns have been inserted to show presumptive income at 6% and 8%.

3. The Finance Act 2016, had introduced the presumptive taxation scheme for professionals as well. Now new ITR 4 Form shows an option to avail such presumptive taxation scheme for professionals under Section 44ADA.

4. Also attaching below an article that describes the logic behind introducing this special clause in Sec.44AD.

If the turnover comprises of both cash and non cash components, it is beneficial to show separately in ITR under cash and non cash heading so that benefit of 8% and 6% can be taken respectively.