 "MSMEs")
The government on Wednesday proposed to enhance the limit for presumptive taxation for MSMEs and certain professionals provided their cash receipts are less than 5 per cent of the total turnover or gross receipts.
The move is aimed at promoting non-cash transactions, as per the Budget document.
The existing provisions of the Income Tax Act provide for a presumptive income scheme for small businesses and certain professionals. Micro enterprises with a turnover of up to Rs 2 crore and certain professionals with a turnover of up to Rs 50 lakh can avail of the benefit of presumptive taxation.
In her Budget Speech in the Lok Sabha, Finance Minister Nirmala Sitharaman said MSMEs are growth engines of the Indian economy.
"I propose to provide enhanced limits of Rs 3 crore and Rs 75 lakh respectively, to the tax payers whose cash receipts are no more than 5 per cent," she said.
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Moreover, to support MSMEs in timely receipt of payments, "I propose to allow deduction for expenditure incurred on payments made to them only when payment is actually made", she added.
Under the current provisions, in case of small businesses a sum equal to 8 per cent or 6 per cent of the turnover or gross receipts is deemed to be the profits and gains from business subject to certain conditions.
In case of professionals, a sum equal to 50 per cent of the gross receipts is deemed to be the profits and gains from business.
As per the Memorandum explaining the provisions in the Finance Bill, 2023, representations were received for increasing the thresholds for eligibility for availing benefit of the presumptive schemes for eligible business and professions in order to benefit more persons in the small and medium segment.
The increase in threshold limits has been proposed in order to ease compliance and to promote non-cash transactions, it said.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
