Opted for presumptive tax scheme? You must pay advance tax

NEW DELHI: The final date for paying the fourth installment of advance tax is 15 March. An particular person with an estimated tax legal responsibility of greater than Rs10,000 in a yr is required to pay advance tax. This can also be relevant on those that have opted for a presumptive taxation scheme. Presumptive taxation scheme (PTS) lets you calculate your tax on an estimated revenue or revenue. “Taxpayers choosing the presumptive taxation scheme of part 44AD are additionally liable to pay advance tax in respect of enterprise coated below part 44AD. By fifteenth March 2021 they’re liable to pay minimal 100% of advance tax in a single installment,” said Vivek Jalan, partner, Tax Connect Advisory Services LLP, a Chartered accountancy firm. Also Read | Dissecting Ola’s audacious electric dreams PTS can be used by businesses having a total turnover of less than Rs2 crore and eligible professionals with gross receipts of less than Rs50 lakh in a financial year. Those who adopt PTS to file their returns are not required to maintain books of accounts. Under PTS, the eligible businesses can estimate their net income at the rate of 6% of the total turnover, if gross receipts are received through digital mode of payments or at the rate of 8% in case of cash receipts. However, the assessee is allowed to willingly declare income at a higher rate than the minimum of 6-8% of the total turnover. Professionals who are governed or regulated by an institute or body such as doctors, lawyers, architects, interior designers and others can adopt PTS. For them, 50% of the total receipts during the fiscal will be considered as profit and get taxed accordingly. A professional can voluntarily declare the income at a higher rate than mandatory 50% of the total receipts. For instance, Mr. Desai is running a medical shop and the turnover of the shop for the financial year 2020-21 amounted to Rs1,25,00,000. He wants to declare income under section 44AD at 8% of the turnover. He does not have any other source of income. He will be liable to pay advance tax. He satisfies the criteria of section 44AD in respect of business and, hence, he can adopt the provisions of section 44AD and declare income at 8% of the turnover. “He is also liable to pay 100% advance tax in respect of income generated from business, by 15th March 2021,” mentioned Jalan. Subscribe to Mint Newsletters * Enter a sound e mail * Thank you for subscribing to our publication.