According to the latest FinanceBill, there have been some exclusive amendments towards the various existing provisions and some new provisions have been introduced as a part of the bill whose implementation will lead to a better administration of the tax system in India.
The present sections 44ADand 44AF shall be omitted and the substituted section 44AD shall be applicable from the assessment year 2011-12 which will cover the provisions relating to computations of business income from retail trading, civil construction or any other business (including manufacturing) on presumptive basis. The provisions of the substituted section are as follows:
Conditions
The following conditions are prescribed for enjoying benefits of section 44AD:
§ Eligible assessee: The assessee should be an ‘eligible assessee’. ‘Eligible assessee’ means an individual, HUF or a partnership firm, who is resident, but not a limited liability partnership firm, and who has not claimed any deduction under the section 10A, 10AA, 10B, 10BA, or 80-IA to 80RRB in the relevant assessment year.
§ Eligible business: The eligible assessee should carry on ‘eligible business’. ‘Eligible business’ means any business except the business of plying, hiring or leasing goods carriages referred to in section 44AE, and, whose total turnover or gross receipt in the previous year does not exceed40 lakhs.
Relevant position for computing deemed income
The following are the relevant provisions for computing deemed income under this section:
1. 8% of the total turnover or gross receipts of the assessee in the previous year onaccount of such business shall be deemed to be the profits and gains of such business chargeable to tax.
2. No further deductions under sections 30 to 38 of the Act shall be allowed from the deemed income as computed above. However, where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the deemed income subject to the conditions and limits specified in section 40(b).
3. The written down value of the assets used in the eligible business shall be determined as if the depreciation, as admissible, has been allowed.
4. The assessee shall be exempted from payment of advance tax related to such business.
5. The assessee can voluntarily declare a higher income than the deemed income in the return of income.
6. The assessee can declare a lower income in the return of income. But in such case he is required to keep and maintain books of accounts as required under section 44AA and get his books of accounts audited as required under section 44AB.
Thus, it would not be wrong to say that the new amendments looks really impressive and promises a lot to offer to the tax authority of India. The implementation of such sections and provisions will definitely lead to a better and simpler form of tax administration in India along with a rational ground for all the assessee upon whom the actions are to be taken.
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