If you have a small business with a gross annual turnover of up to Rs 40 lakhs (Rs 4 million), you do not have to maintain books of accounts for scrutiny of an income tax inspector, provided you declare taxable income at eight per cent of total sales.
Earlier, this facility, known as the 'Presumptive Tax' was limited to construction, goods carriages and retail trade.
Finance minister Pranab Mukherjee has expanded the scope of the 'presumptive tax' from 2010-11 to all businesses making life easier for millions of small businessmen.
Besides,these small business units will not have to pay advance tax.
"To facilitate the business operations of all small tax payers and reduce their compliance burden I propose to expand the scope presumptive taxation to all small businesses with a turnover of up to Rs 40 lakhs," Mukherjee said in the Budget.
Micro, small and medium enterprises contributes about 40 per cent to the country's industrial output.
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