Library / Income-tax Act, 2025: The Professional's Master Guide

59. Case Study 12: Small Trader under the Presumptive Scheme

Facts. Joseph runs a provision store as a sole proprietor. Turnover for Tax Year 2026-27 is Rs. 1.1 crore: Rs. 95 lakh received through UPI and bank, Rs. 15 lakh in cash. He also has bank interest of Rs. 1,20,000 and LTCG on equity funds of Rs. 60,000. He is in the new regime.

59.1 Step 1: eligibility

Cash receipts are 13.6% of turnover, more than 5%, so the limit is Rs. 2 crore (not Rs. 3 crore). Turnover of Rs. 1.1 crore is within it. He is a resident individual, so section 58 is available.

59.2 Step 2: income and tax

6% of Rs. 95 lakh (digital receipts)	5,70,000
8% of Rs. 15 lakh (cash receipts)	1,20,000
Presumptive business income	6,90,000
Add: bank interest	1,20,000
Total income at normal rates	8,10,000
Tax on Rs. 8,10,000	21,000
Less: rebate under section 156 (income up to Rs. 12 lakh)	(21,000)
LTCG of Rs. 60,000 within the Rs. 1,25,000 exemption	Nil
Tax payable	Nil

59.3 Step 3: compliance

File ITR-4 by 31 August 2027 (non-audit business case). Since ITR-4 now allows LTCG under section 198 up to Rs. 1,25,000, he can use it.
Keep basic records of turnover and bank statements; the GST turnover must match the turnover declared.
No advance tax is payable, since tax is nil. If tax were payable, the whole amount would be due by 15 March 2027.
If he declares less than 6% or 8% in a later year, the five-year lock out and audit rules apply.