GO DIGITAL: LESS TAX FOR

SMALL TRADERS ON DIGITAL

TRANSACTIONS.
-A STUDY WITH REFERENCE
TO MANGALORE CITY.
By:
Chaithra
Meril
Nishmitha
INTRODUCTION

Digital India is a campaign launched by the government of India

to ensure that services are made available to small traders
electronically by improved online infrastructure.

The small traders with the turnover of upto rupees two crores will
pay less tax if they accept payments through digital means.

The existing rate of deemed profit of eight percent under section

44 A.D of the income tax act 1961 to six percent in respect of the
amount of total turnover to digital means and if small traders
having turnover upto sixty six lakhs will have zero tax liability
OBJECTIVE

To know whether the small traders are aware of digital

transactions

To make study on the small traders using digital transactions to

avail tax benefits

To identify the benefits of using digital transactions

To find out the difficulties faced by the small traders using digital
transactions
RESEARCH METHODOLOGY

The primary data for the study was collected from small traders in
Mangalore city.

Due to distance and resource constraints only 30 small traders

have been selected as a sample respondents.

Secondary data was collected from internet.

DATA ANALAYSIS

Business turnover per Concern about cashless

month payment Security

Poor
10% Below 3 Internet
7% 10%
Lakh Connectivity
3 Lakh-4 Merchant
20% 40% Lakh 43% Acceptance
10%
4 Lakh -
5lakh costs
30% 30%
Above 5
Lakh Lack Of
Tech Know
How
 Digital Payment Mode The Preferred Mode
Of Transaction
Debit/ Credit Cash
Card Transactio
17% n
47% E-Wallet
23% 40% Digital
13% Internet 60% Transactio
Banking n
Mobile
Banking
 Opinion Regarding payment Of
Tax Awareness About
Dont Know
Tax Benefits For
Digital Transaction

It Is An
10% 13% Obligation
Towards
Government
20% Penality/Sancti 37%
on
63%
In Anticipation
3%
54% Of Public
Service Yes
No
There Is No
Apportunity To
Evade
 Various Sources Of Opinion Regarding
Information On Less Tax On Major Tax Relief
Digital Transaction

Satisfied
7%
Less
21% Media Satisfied
30% Not
Internet 63% Satisfied
21% 58% Friends
Opinion About The Strengthening Of Small
Traders

43%
Yes
57% no
FINDINGS
Only 40% of the respondents prefer digital transaction, the behavioural shift has
not yet happened has 60% of traders still prefer cash transaction.
43% of the respondents have security concern ,10% of the respondents concern is
about poor internet connection and 10% of the respondents lack tech know how,
this prevents the traders from moving over to digital transaction.
47% of respondents use debit/credit Card and 13% of the respondents use E-
Wallet.
53% of the respondents think that paying tax is an obligation towards government
20% think that it is an anticipation of public service, 14% of the respondents dont
know why they pay tax.
63 % of respondents are aware of the tax benefits provided by the government for
the small traders on digital transactions and 7% of the respondents are not aware
about the tax benefits.
63% of the respondents are satisfied with the major tax benefit,30% are less
satisfied and 7% of the respondents are not satisfied .
57% of the respondents agree that the tax benefit provided by government will
strengthen their business and 43% of respondents that the tax benefit provided by
the government will not strengthen there business.
SUGGESTIONS

Habits related to online transactions and usage need to undergo a drastic

change.

A cultural and mindset change is required to make them accept and feel
comfortable with digital payments.

It is also suggested that to increase the usage of digital transactions, the

aspect of security should be increased and incidence of hacking,
skimming of PIN from ATMs should be reduced and appropriate action
in this regard should be undertaken.

Less tax on digital transaction is necessary to achieve cashless economy.

So awareness regarding this should be given to the small traders.
CONCLUSION

A digital push helps the small traders to save upto forty six
percent in tax. By migrating to digital mode , the small traders
would able to get loans easily .

The objective of this is that the small traders who deal in digital
transaction modes their income will be presumed to be two
percent less that is six percent .

In order to boost digital payments the government is providing

incentives to the small traders to proactively accept digital
transactions.