Demonetisation: Small Businesses to Pay Less Tax on Digital Transactions

As a follow up to its November 8 decision to demonetise high-value currency, the government said small traders and businesses with a turnover of up to Rs 2 crore will pay less tax if they accept payments through banking and digital means.Read more: Netflix Strikes Deal With Shah Rukh Khan's Red Chillies Entertainment

Under the existing provision in case of certain assessees -- an individual, Hindu Undivided Family (HUF), or a partnership firm other than a limited liability partnership -- having a turnover of Rs 2 crore or less, the profit calculation for taxation purposes is deemed to be 8 per cent of the total turnover, the Ministry said in a release.

"However, the existing rate of deemed profit of 8 per cent referred to in section 44AD of the Act, shall continue to apply in respect of total turnover or gross receipts received in cash," it added.

The Ministry said the legislative amendments in this regard would be carried out through the Finance Bill, 2017.