8% of Turnover is Deemed as Profit from Business
But Person may have some other incomes also like Income from Other Sources and Gross Total Income
These are to be taken into account while calculating Income Tax

Example 1A
Suppose a person has a small chemist business with monthly turnover of 400000 per month. He has also Interest Income of FD of 5000
What will be TDS deducted by company if

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Income Tax  Computation

Particulars Amt
MONTHLY TURNOVER 400000
ANNUAL TURNOVER 4800000
PROFIT AND GAIN OF BUSINESS AND PROFESSION 384000
(MINIMUM 8% OF TURNOVER)  
INCOME FROM OTHER SOURCES 5000
GROSS TOTAL INCOME 389000
Less  
DEDUCTIONS 0
NET TOTAL INCOME 389000
TAX 13900
REBATE 5000
NET TAX 8900
CESS 267
TAX+ CESS 9167

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 Example 1B

Suppose a person has a small chemist business with monthly turnover of 400000 per month. He has also Interest Income of FD of 50000 on which Bank has deducted 5000 TDS
What will be TDS deducted by company if

-a-

Income Tax Computation

Particulars Amt
MONTHLY TURNOVER 400000
ANNUAL TURNOVER 4800000
PROFIT AND GAIN OF BUSINESS AND PROFESSION 384000
(MINIMUM 8% OF TURNOVER)  
INCOME FROM OTHER SOURCES 50000
GROSS TOTAL INCOME 434000
Less  
DEDUCTIONS 0
NET TOTAL INCOME 434000
TAX 18400
REBATE 5000
NET TAX 13400
CESS 402
TAX+ CESS 13802
Less  
TDS 5000
Net Tax Payable 8802

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Note:-
TDS under Section 194A is applicable if Interest paid by bank on FD is more than 10000
Read more

 Example 1C
Suppose a person has a small chemist business with monthly turnover of 400000 per month. He has also Interest Income of FD of 50000 on which Bank has deducted 5000 TDS
He also has interest Income of 12000 on Savings What will be TDS deducted by company if 

-a-
Income Tax Computation

Particulars Amt
MONTHLY TURNOVER 400000
ANNUAL TURNOVER 4800000
   
PROFIT AND GAIN OF BUSINESS AND PROFESSION 384000
(MINIMUM 8% OF TURNOVER)  
INCOME FROM OTHER SOURCES 62000
GROSS TOTAL INCOME 446000
Less  
DEDUCTIONS 10000
NET TOTAL INCOME 436000
TAX 18600
REBATE 5000
NET TAX 13600
CESS 408
TAX+ CESS 14008
Less  
TDS 5000
Net Tax Payable 9008

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Note:-
TDS under Section 194A is not applicable on Interest on Savings On Interest on Savings,Deduction available under Section 80TTA of Maximum 10000
Read more

Example 2

Find tax in following cases

Particulars Case 1 Case 2 Case 3 Case 4 Case 5
TURNOVER OF BUSINESS 5000000 5000000 5000000 5000000 5000000
INTEREST INCOME ON FD 4000 4000 40000 40000 0
INTEREST INCOME ON SAVINGS 3000 13000 13000 0 13000

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Particulars Case 1 Case 2 Case 3 Case 4 Case 5
TURNOVER OF BUSINESS 5000000 5000000 5000000 5000000 5000000
           
PGBP INCOME 400000 400000 400000 400000 400000
INCOME FROM OTHER SOURCES 7000 17000 53000 40000 13000
           
GROSS TOTAL INCOME 407000 417000 453000 440000 413000
LESS          
DEDUCTIONS 3000 10000 10000 0 10000
NET TOTAL INCOME 404000 407000 443000 440000 403000
TAX 15400 15700 19300 19000 15300
REBATE 5000 5000 5000 5000 5000
NET TAX 10400 10700 14300 14000 10300
CESS 312 321 429 420 309
TAX+ CESS 10712 11021 14729 14420 10609
Less          
TDS 0 0 4000 4000 0
Net Tax Payable 10712 11021 10729 10420 10609

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  1. Practical Income Tax
  2. Income Tax for Small Business
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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