As a part strategy on pushing India towards cashless economy, the Govt. of India notified about the lower rate of tax for business opting for digital transactions.

According to section 44AD of Income Tax Act 1961, business with turnover of less than two crores and maintaining no books of accounts have an option to opt for presumptive taxation scheme where in their income would be presumed to be 8% of the turnover.
Now, as per the notification business having digital turnover of less than two crores would be presumed to have a profit of 6% instead of 8% thus saving big on taxes.

What constitutes digital turnover ?

Transactions via banking channel such as cheque, NEFT, RTGS, POS & adoption of any digital payment gateway system would be taken as digital transaction.

Who can opt for this scheme ?

Sole proprietors, HUF & Partnership Firms (excluding LLPs) having turnover of less than two crores and opting for presumptive scheme are eligible for the lower rate of tax.

How much will I save on going digital ?

Say, you had a cash turnover of 2 Crores, your profit would be assumed to be 8%, i.e 16 Lakhs, you would be paying around 3.14 Lakhs (on individual slab) as tax.
But lets say if you have digital turnover of 2 Crores, your profit would be assumed to be 6%, i.e 12 Lakhs, so you would be paying around 1.90 Lakhs (on individual slab) as tax.

There is almost 36% savings on taxes on the above case.

How do I go digital ?

Read here on the digital options you can opt for, also if you are in need of any assistance our Tradevisers can even setup your digital business. Contact us here for the same.

Note:
The calculation above is for illustration purpose only, actual savings may differ according to the business type, turnover and tax saving options opted.