Amendment of section 44AD.
16. In section 44AD of the Income-tax Act, in sub-section (1), in the proviso, for the words “bank account”, the words “bank account or through such other electronic mode as may be prescribed” shall be substituted with effect from the 1st day of April, 2020.
Notes on Clauses:
Clause 16 of the Bill seeks to amend section 44AD of the Incometax Act relating to special provision for computing profits and gains of business on presumptive basis.
Sub-section (1) of the said section provides that notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible business, a sum equal to eight per cent. of the total turnover or gross receipts of the assessee in the previous year on account of such business or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee, shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”.
The proviso to the said sub-section (1) provides that 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, a sum equal to six per cent. or higher shall be deemed to be the profits and gains of business and profession.
It is proposed to amend the said proviso so as to empower the Board to make rules to provide that an eligible assessee can opt for presumptive taxation scheme if he declares profit at the rate of six per cent. or higher of the turnover, received through any other electronic mode as may be prescribed.
This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-2021 and subsequent assessment years.
