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Presumptive Taxation

Presumptive taxation and Tax audit and books of accounts

Under Tax law for individual / partnership firm but not an LLP can enjoy special benefit called presumptive taxation wherein taxpayer was relieved from maintenance of full fledge books of accounts and tax law assumes that only 8% or 6% or 50% of turnover / gross receipts as taxable income (presumptive income) and taxpayer need to pay tax rate as applicable to them on such presumptive income

  • Individual / partnership firm – carrying on eligible Business
  • Individual / partnership firm – carrying on eligible Profession
  • Individual / partnership firm - carrying on business of plying, hiring or leasing goods carriages

Individual / partnership firm – carrying on eligible business

Eligible business means

Any business except the business of plying, hiring or leasing goods carriages whose total turnover or gross receipts from such business in a financial year does not exceed an amount of two crore rupees.

Presumptive income

8% of Turnover – If gross receipts is recovered as cash payment

6% of Turnover – If gross receipts is recovered as electronic payment

Individual / partnership firm – carrying on eligible profession

Eligible Profession means

Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration

Presumptive income

50% of turnover / Gross receipts

Individual / partnership firm carrying on business of plying, hiring or leasing goods carriages

Presumptive income

Scenarios Presumptive income
If tax payer owns a “heavy good vehicle”
Rs. 1,000 per ton of gross vehicle weight for every month or part of a month during which the heavy goods vehicle is owned by taxpayer
If tax payer owns a “Other good vehicle”
Rs 7,500 for every month or part of a month during which the goods carriage is owned by taxpayer

“Heavy goods vehicle” means any goods carriage the gross vehicle weight of which, or a tractor or a road-roller the unladen weight of either of which, exceeds 12,000 kilograms;’

“Goods carriage” means any motor vehicle constructed or adapted for use solely for the carriage of goods, or any motor vehicle not so constructed or adapted when used for the carriage of goods;

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