The draft of the Income Tax (First Amendment) Act, 2016 has prescribed rules for the computation of the tax payable on profits and gains of a trader falling under sub-section (1) of section 99A. Under the proposed scheme, the tax payable on profits and gains of a trader falling under sub-section (1) of section 99A in respect of trading activities chargeable under the head "Income from Business" shall be computed in the manner hereinafter provided. For trader qualifying under this Part, working capital for tax year 2015 shall not exceed rupees fifty million and tax at the rate of one per cent of the working capital shall be tax payable on profits and gains from the trading activity.
For tax year 2016, 2017 and 2018, trader qualifying under this Part shall pay tax at the rates specified in rule (4), subject to the following conditions: Firstly, for tax year 2016, the trader shall declare turnover at least three times of the working capital declared during tax year 2015 and secondly for tax years 2017 and 2018 the trader shall declare turnover on which tax paid is at least twenty five per cent more than the tax paid for tax year 2016.
For the purpose of rule (3), the tax rate on turnover shall be: Where turnover does not exceed Rs 50 million, the tax rate would be 0.2 percent; Where turnover exceeds Rs 50 million but does not exceed Rs 250 million, tax would be Rs 100,000 plus 0.15 percent of the turnover exceeding Rs 50 million and where turnover exceeds Rs 250 million, tax would be Rs 400,000 plus 0.1 percent of the turnover exceeding Rs 250 million, draft of the Income Tax (First Amendment) Act, 2016 added.