Under this section, an eligible assessee engaged in eligible business with turnover less than 2 Crore can consider his taxable business income (PGBP) as –
1. 6% of his digitally* received turnover or gross receipt [Only for AY 2018-19]; and
2. 8% of his remaining turnover or gross receipt
The 6% or 8% is the minimum taxable limit and declaration of business income below this limit will cause a taxpayer to maintain proper books of accounts in order to justify his low income. He would also be required to file tax audit if his total income exceeds the maximum amount not chargeable to income-tax [In AY 2018-19 for normal taxpayer it is Rs.2.5 lakh]
Income at a higher rate, i.e. higher than 8% can be declared if the actual income is higher than 8%.
No other deductions are allowed from the computed income, as we can see here that after applying these rates we get the net taxable business income (PGBP). However, deduction of chapter VI-A is available.
*Digitally means- Money received through an account payee cheque or an account payee bank draft or RTGS/NEFT/ECS/Debit or Credit Card/IMPS during the previous year or before the due date specified in sub-section (1) of section 139 in respect of that previous year.