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Computation of Presumptive Income in Case of Firm Video Lecture | Income Tax for assessment (Inter Level) - Taxation
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FAQs on Computation of Presumptive Income in Case of Firm Video Lecture - Income Tax for assessment (Inter Level) - Taxation
| 1. What is presumptive income in case of firm taxation? |  |
Ans. Presumptive income in case of firm taxation refers to a method used by tax authorities to calculate the taxable income of a firm based on certain presumptive rates or percentages of the firm's gross receipts or turnover. It is a simplified method of determining the firm's income for tax purposes.
| 2. How is presumptive income computed in case of firm taxation? | |
Ans. Presumptive income in case of firm taxation is computed by applying a presumptive rate or percentage to the firm's gross receipts or turnover. The presumptive rate varies based on the nature of the firm's business. For example, if the presumptive rate is 8%, and the firm's turnover is $100,000, the presumptive income would be $8,000.
| 3. Are there any conditions or criteria for applying presumptive income in case of firm taxation? | |
Ans. Yes, there are certain conditions and criteria for applying presumptive income in case of firm taxation. The firm should be engaged in specified businesses such as retail trade, restaurant, or profession. Its total turnover or gross receipts should not exceed a certain threshold, which is determined by the tax authorities. Additionally, the firm should not have claimed certain deductions under the income tax laws.
| 4. What are the advantages of using presumptive income in case of firm taxation? | |
Ans. The advantages of using presumptive income in case of firm taxation include simplicity and ease of compliance. It reduces the burden of maintaining detailed books of accounts and conducting complex tax calculations. It also provides a certain level of certainty and predictability in tax liability, as the tax is based on a predetermined rate or percentage of turnover.
| 5. Can a firm opt out of presumptive income in case of firm taxation? | |
Ans. Yes, a firm can opt out of presumptive income in case of firm taxation. However, once a firm opts out, it cannot opt back in for a period of five consecutive assessment years. Opting out requires the firm to maintain regular books of accounts and follow the regular method of computing taxable income as per the income tax laws. The decision to opt out should be carefully evaluated based on the firm's specific circumstances and tax planning requirements.
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Nov 16, 2024 Last updated |
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