Presumptive income for professionals - Easwar Committee's Recommendation
THIS is good news for the professionals. The Income Tax Simplification Committee headed by Justice Easwar in its first draft report has suggested a scheme of presumptive income for professionals.
The existing scheme of taxation provides for a simplified presumptive income scheme for persons engaged in business. The Committee was of the view that this scheme is quite popular amongst small traders. It was felt that there is a strong case for introducing a similar simplified presumptive income scheme for professionals. Accordingly, the Committee recommends the introduction of a presumptive income scheme whereby the income from profession will be estimated to be thirty three and one-third (33 1 /3%) of the total receipts in the previous year. The benefit of this scheme will be restricted to professionals whose total receipts do not exceed one crore rupees during the financial year.
The Committee has even submitted a draft amendment to the Income Tax Act inserting a new Section 44AG.
44AG. (1) Notwithstanding anything to the contrary contained in sections 28 to 43C, in the case of an eligible assessee engaged in an eligible profession, the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession" shall be deemed to be - (i) a sum equal to thirty three and one-third per cent of the gross receipts of the assessee in the previous year on account of such profession; or (ii) a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee.
"Eligible profession" means,-
(i) the legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as may be prescribed; and
(ii) whose total gross receipts in the previous year does not exceed an amount of one crore rupees.
Let us hope the FM accepts this recommendation and it becomes a part of the statute in the budget.