The Central Board of Direct Taxes announced 19 December 2016, stating that in order incentivize small traders/businesses to proactively accept payments by digital means, it has been decided to reduce the existing rate of deemed profit of 8% under Section 44AD of the Act to 6% in respect of the amount of total turnover or gross receipts received through banking channel/digital means for the Financial Year (FY) 2016-17.
However, the existing rate of deemed profit at 8% will continue to apply in respect of total turnover or gross receipts when received in cash. It is expected that a legislative amendment to reflect this policy will be included in Finance Bill, 2017.
