New Delhi: Finance Minister Arun Jaitley has said that small traders and businesses with a turnover of up to 2 crore rupees will pay less tax if they accept payments through banking and digital means.

Speaking to reporters in New Delhi yesterday, he said, in 2016-17 budget, small traders and businessmen, with turnover of up to 2 crore rupees who did not maintain proper accounts, were presumed to have earned 8 per cent income or profit for tax purposes.

But if they use digital modes of payments, their income will now be presumed to be 6 per cent of the turnover and not 8 per cent.

Earlier in the day, the CBDT in a communication said it has been decided to reduce the existing rate of deemed profit of 8 per cent under section 44AD of the Act to 6 per cent in respect of the amount of total turnover or gross receipts received through banking channel/digital means for the financial year 2016-17.

However, the existing rate of deemed profit of 8 per cent referred to in section 44AD of the Act, shall continue to apply in respect of total turnover or gross receipts received in cash, the tax department added.

The decision has been taken to achieve the government’s mission of moving towards a less cash economy and to incentivise small traders and businesses to proactively accept payments by digital means.