Presumptive tax net widened to cover all small businesses

The presumptive taxation scheme, so far restricted to civil construction and retail trade, would now cover all small businesses with gross turnover/gross receipts of up to Rs.40 lakh. Individuals, HUFs and partnership firms would be covered under this scheme. The rate of tax would be 8% of gross turnover or gross receipts. The intention of widening the scope of this scheme is to reduce the compliance burden on small businessmen and relieve them from the requirement of maintaining books of account. Further, they would also be relieved from the requirement of advance tax payments. It would be sufficient compliance if they pay their tax while filing their return of income before the due date.The only drawback of this scheme is that the presumptive rate of 8% may be on the higher side for these small businesses.