Professionals pay tax on 50% of gross receipts (old section 44ADA). Businesses pay tax on 6% of digital and 8% of cash turnover (old section 44AD). From FY 2026-27, both are part of section 58 of the Income-tax Act, 2025, with the same rates and limits.
How presumptive tax is calculated
Deemed profit = 50% of receipts (professionals) | 6% digital + 8% cash turnover (businesses)
- Professionals
- Doctors, lawyers, CAs, engineers, architects, designers, IT consultants and similar
- Limit (profession)
- ₹50 lakh, or ₹75 lakh if cash receipts are 5% or less
- Limit (business)
- ₹2 crore, or ₹3 crore if cash receipts are 5% or less
- Tax
- Slab tax on the deemed profit, with rebate and cess
No other expenses are deducted from the deemed profit. In return you don't need to maintain detailed books or get a tax audit, as long as you declare at least the presumptive rate.
The whole year's advance tax is due in a single instalment by 15 March. LLPs and companies cannot use the scheme, and income from commission or brokerage does not qualify.
Is presumptive tax right for you?
It works best when your real expenses are lower than the presumed share.
- Freelancers with few expenses usually save time and tax with the 50% rate.
- If your actual profit is lower than the presumed rate, you can declare it only with books and a tax audit.
- Once you opt out of 44AD, you generally cannot opt back in for five years.
- GST registration is a separate test based on turnover, not on this scheme.