Tax threshold for retailers is at 8% of turnover now

Is there any important change in taxation law for a retailer filing return for FY 2010-11 compared with the previous year?
From the assessment year 2011-12 relevant to previous year ended on March 31, 2011, returns whereof are due inter alia by July 31, 2011, new provisions relating to taxation of small businesses would have substantial impact.

Earlier, assesses having gross receipts upto Rs40 lakh in civil construction business or supply of labour for civil construction business were covered by presumptive taxation scheme u/s. 44AD, requiring them to either declare profit from such business at 8% or higher of gross receipts and get immunity from maintaining books of account or declare profit less than such 8% and to maintain books of account and to get the same tax audited. Similarly, persons engaged in retail business having turnover upto `40 lakh were covered by the presumptive scheme u/s. 44AF requiring them to either declare profit at 5% or higher of such turnover and get immunity from maintaining books of account or declare profit less than such 5% and to maintain books of account and to get the same tax audited.

New provisions have been recast in section 44AD. First up, not only the civil construction and retail business but all small businesses, except specified business of plying, hiring or leasing goods carriage having turnover or gross receipts, upto Rs60 lakh are covered in the presumptive scheme requiring them to either declare  profit at 8% or higher of such turnover or gross receipts, as the case may be, and get immunity from maintaining books of account or to declare profit less than such 8% and to maintain books of account and to get the same tax audited.

Thus, as far as retailers are concerned till the last year they were able to offer profit of 5% or higher, but now they are required to offer profits of 8% or higher.

As far as partnership firm is concerned, out of such declared profits, it can claim further deduction for remuneration and interest to partners.

Small business would include even the service providers excluding professionals.

What is the consequence if return is not filed before due date July 31, 2011?
Due date for filing return of income for assessment year 2011-12 for a non-audit assessee is July 31, 2011. However, if the assessee is a working partner in a firm, whose accounts are to be audited, then the due date is September 30, 2011. If the assessee is a company which has to file a report in Form No. 3CEB under Section 92E pertaining to international transaction(s) then the due date is November 30, 2011. For all other audit assesses the due date is September 30, 2011.

If return is not submitted on or before due date, a belated return can be submitted on or before March 31, 2013. However, penal interest would become payable. Further, if the return is filed beyond March 31, 2012, a penalty of Rs5,000 may be imposed. If return of loss is submitted after the due date a few losses cannot be carried forward. If return is submitted belated, deduction under sections 10A, 10B, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID & 80-IE will not be available. Return filed after due date cannot be revised.

I am developer constructing a building. For taxation of income from the project, do I have to show a percentage of income every year or can I postpone it till completion of the project?
As a developer, you are entitled to follow either percentage completion method of accounting or project completion method for the purpose of offering income under the provisions of the Income Tax Act, 1961. Despite many changes having taken place in the recent years in accounting aspects for real estate developers, particularly in respect of their sales of units under construction, there are no changes in taxation law. Further, in the State of Maharashtra, you can take added support of the stringent provisions of the MOFA, 1963 in favour of the flat purchasers to follow project completion method. 

— Tarun Ghia is a chartered accountant and can be reached at ghiatarun@ rediffmail.com. Pradnya Vairale is an advocate and can be reached at advpradnyag @gmail.com