Head #3 of 5
Presumptive Taxation: 44AD & 44ADA (Now Sections 58 & 59)
The favourite scheme of small businesses and professionals — skip maintaining books, declare a fixed percentage as income, and file easily. Same scheme, new numbers in the 2025 Act.
Businesses — 44AD → Section 58
| Item | Detail |
|---|---|
| Who is eligible | Resident Individuals, HUFs, Partnership Firms (LLP ) |
| Turnover limit | ₹2 crore — or ₹3 crore if cash receipts ≤ 5% |
| Presumptive income | 8% of turnover (cash receipts) • 6% (digital/bank receipts) |
| Books of accounts | Not required (if you opt in) |
| Advance tax | One instalment only — 100% by 15 March |
Example — Sharma ji's kirana store
Turnover ₹80,00,000 — fully digital (UPI/card).
• Presumptive income = 6% × ₹80L = ₹4,80,000
• That IS the business income — shop rent, staff salary etc. are 'deemed' covered; nothing more is deducted
• On ₹4.8L, new-regime tax ≈ ₹8,000 + cess — and no books, no audit.
• Presumptive income = 6% × ₹80L = ₹4,80,000
• That IS the business income — shop rent, staff salary etc. are 'deemed' covered; nothing more is deducted
• On ₹4.8L, new-regime tax ≈ ₹8,000 + cess — and no books, no audit.
Professionals — 44ADA → Section 59
Doctors, lawyers, CAs, architects, engineers, IT consultants and other notified professionals/freelancers:
| Item | Detail |
|---|---|
| Gross receipts limit | ₹50 lakh — or ₹75 lakh if cash ≤ 5% |
| Presumptive income | 50% of gross receipts |
| Who | Resident individuals & firms (LLP ) |
Example — Ananya the freelance designer
Ananya's freelancing receipts are ₹40,00,000 (all through banks).
• Presumptive income = 50% × ₹40L = ₹20,00,000
• Her actual expenses (laptop, software, co-working) were ₹12L — but under presumptive you simply declare 50%; expenses aren't claimed separately
• If your real profit is below 50% and your income crosses the audit limit, books + audit become mandatory. High-expense professionals should use the regular computation instead.
• Presumptive income = 50% × ₹40L = ₹20,00,000
• Her actual expenses (laptop, software, co-working) were ₹12L — but under presumptive you simply declare 50%; expenses aren't claimed separately
• If your real profit is below 50% and your income crosses the audit limit, books + audit become mandatory. High-expense professionals should use the regular computation instead.
The 5-year rule (business): once you opt out of 44AD/Section 58, you cannot re-enter for the next 5 years (and if income exceeds the basic exemption, audit + books become compulsory). Opt out only with a plan!
Transporters — 44AE (renumbered)
If you own up to 10 goods vehicles: income is presumed at ₹7,500/vehicle/month (light goods) or ₹1,000/ton/month (heavy vehicles) — based on vehicle count, not turnover.
- Even after declaring presumptive income you still get deductions (Sec 123 etc., old regime) and the slab benefit
- Business income restricts regime switching — leave the new regime and you may return only once
- Above the limits, or if you skip presumptive taxation → regular computation + audit (limit: ₹1cr; ₹10cr for digital-heavy businesses)
- Advance tax: presumptive taxpayers pay once (15 March); regular businesses pay 4 instalments — see the advance tax guide
🧮 Quick maths: the ₹3cr / ₹75L cashless bonus
Standard presumptive limits: 44AD ₹2cr turnover, 44ADA ₹50L receipts. But keep cash below 5% and they jump to ₹3cr and ₹75L. At 44ADA's 50% deemed profit, a ₹60L-receipt consultant shows just ₹30L income — no books, no audit, ITR-4. The catch? Opt out once and you're barred 5 years. Growing fast toward the limit? Model the exit BEFORE you need it.
🧮 Quick maths: 44AD's 8% vs 6% split
44AD deems 8% of turnover as profit — but only 6% for digital/cheque receipts. A ₹80L-turnover trader with 90% digital receipts shows (₹8L×8%) + (₹72L×6%) = ₹4.96L income instead of ₹6.4L — the digital discount saves real tax AND documents itself. Below the limits: no books, no audit, ITR-4. Declare LESS than deemed? Then books + audit become mandatory — the presumptive door swings both ways.
By TaxSetu Editorial Team · Last reviewed: 7 October 2026
Based on the Income-tax Act 2025, Income Tax Rules 2026 and CBDT notifications; sections per the Income-tax Act 1961 (as amended) with 2025-Act mappings where notified · Verify on the official portal: incometax.gov.in
Keep Reading
Salary & HRAStandard deduction ₹75,000, HRA least-of-3 formula (50% now for Bengaluru, Hyderabad, Pune…House Property30% flat deduction on rent, ₹2L home-loan interest (old regime), self-occupied vs let-out …Capital Gains2026-27 capital gains rates: equity LTCG 12.5% above ₹1.25L, STCG 20%, property 12.5% with…Other Sources + CryptoCrypto: flat 30% on profits + 1% TDS, no loss set-off. Plus FD/savings interest tax, the ₹…