A Complete Guide on How to Deposit Self-Assessment Tax Online

Under the Income Tax Act of 1961, individuals involved in business or professional activities  must maintain accounting records and regularly audit their accounts. However, this process can  be both time-consuming and costly. In order to simplify this, the presumptive taxation scheme  allows eligible taxpayers to declare their income at a predetermined rate. By opting for this

scheme, taxpayers are exempt from maintaining detailed books of accounts and from auditing  their financial records.

The following taxpayers are eligible for presumptive taxation:

• Resident individuals

• Hindu Undivided Families (HUFs)

• Partnership firms (excluding Limited Liability Partnerships)

Additionally, the following professions qualify for the presumptive taxation scheme under  Section 44ADA:

• Legal

• Medical

• Engineering or architectural

• Accountancy

• Technical consultancy

• Interior decoration

• Other professions notified by the Central Board of Direct Taxes (CBDT)

Under the presumptive taxation scheme, a person's income is calculated at 8% of the business's  turnover or gross receipts for the concerned year according to the provisions of Section 44AD.  Further, with effect from the assessment year 2017-18, the government reduced the estimated  rate to 6% under Section 139 if the turnover/gross receipt of a business is received by the  following modes during the previous year or before the due date of filing the income tax return:

• Account payee bank draft

• Account payee cheque

• A bank account's electronic clearing system

• Other electronic modes

This implementation was to encourage digital transactions among small businesses.

It is important to note that professionals who wish to use the presumptive taxation scheme must  use Form ITR 3 to file their IT returns. The return should be filed and submitted on or before  July 31 of the concerned assessment year.

• Individuals can claim a tax deduction for any donation made to the Prime Minister's  National Relief Fund (PMNRF).

• Individuals can claim a tax deduction for any donation made to the National Defence  Fund (NDF).

• Paying advance tax is far simpler under presumptive taxation. Taxpayers can pay their  advance tax once before March 31 of the concerned year instead of estimating the future  income and paying tax each quarter. For those who expect their income to be more than  ₹10,000 in a financial year, the advance tax must be paid by March 15.

• Simplified process

Filing the tax return is simpler under presumptive taxation as the  time spent is less. The presumptive taxation scheme is a practical option for those looking  to streamline their taxes quickly.

• Reduced costs

Filing an income tax return can be costly in complex cases. Taxpayers  may need to hire a chartered account or tax professional for assistance. However, the  presumptive taxation scheme is straightforward and can be done by taxpayers. Hiring a  third party is unnecessary, which can save a fair amount.

• No need for keeping books of accounts

The presumptive taxation scheme eliminates  the need to maintain books of accounts and conduct regular audits. This reduces the  compliance burden. Further, it helps taxpayers save time and money and use these  savings for their business or profession.

• Boon for small businesses

The presumptive taxation scheme is particularly helpful for  small businesses that may not have the time and resources to audit books and maintain  accounting records. Moreover, the Government of India offers concessions on digital  payments. Small businesses can truly benefit from such provisions and save money.