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Debtors bifurcation of finalization of balance sheet

Question BankCategory: Income TaxDebtors bifurcation of finalization of balance sheet
Kollipara sundaraiah asked 5 months ago

It assessess presumptive scheme of income tax net profit 8 precent on cash sales and net profit 6 precentage on digital bank transaction declared
Assessess how the bifurcation of debtors un paid balance at the time of finilazation of balance sheet.

1 Answers
Ashok answered 5 months ago

I understand that your question is about bifurcation of credit sale (debtors) for the calculation of profit as 6% or 8% of turnover.
As we know that , In case of a person adopting the provisions of section 44AD, income is computed on presumptive basis at the rate of 8% of the turnover or gross receipts of the eligible business for the year.
In order to promote digital transactions and to encourage small unorganized business to accept digital payments, section 44AD is amended with effect from the assessment year 2017-18 to provide that income shall be computed at the rate of 6% instead of 8% if turnover/gross receipt is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed during the previous year or before the due date of filing of return under section 139(1).
Hence under section 44AD, profit is calculated in following manner for different categories of Turnover:-

  1. Turnover (for which amount is received digitally upto 31st March of financial year) :- 6% of the amount
  2. Turnover (for which amount is received in cash upto 31st march of the financial year):- 8% of the amount
  3. Credit sale (for which amount not received upto 31st of the financial year) is dealt as follows:-

(a) That part of credit sale for which amount is received digitally (net banking, UPI, account payee cheque/draft etc) before due date for filing ITR u/s 139(1) (for FY 2022-23 it should be received before 31st July 2023) then :- Profit is taken as 6% of amount.
(b) balance credit sale :- 8% of amount 

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