With the budget concluding, this will easily be one of the most under-rated and mis-understood highlights this year. Budget 2016 has exponentially made tax compliance easier for professionals and startups.
Professionals to come under Section 44AD
What this would be mean is, all professionals with gross receipts (revenue) up to Rs 50 lakhs will now:
A. be liable to declare profit and pay taxes at 50% of gross receipts (revenue)
B. no longer have to maintain cumbersome book of accounts or be subject to audit requirements.
C. be able to file taxes via a simpler ITR-4S form instead of the lengthier ITR 4.
SMEs to come under Section 44AD
The limit of turnover has been revised from Rs 1 crore to Rs 2 crore for medium or small enterprises, under Section 44AD. Now, businesses with an annual turnover less than or equal to Rs 2 crores will be able to file ITR 4S instead of the more lengthier ITR 4.
This is MASSIVE development for small enterprises and start-ups as well as professionals such as lawyers and doctors, interior designers etc.
[Contributed by Cleartax team]