What is Presumptive Taxation?
Section 58 of the Income-tax Act, 2025 consolidates the former presumptive schemes in a table. A qualifying resident in a specified profession can use the professional row and offer at least 50% of eligible gross receipts as profit, subject to all conditions. Actual receipts, digital/cash mix, profession and any higher declared profit still matter.
Eligibility Criteria
For the professional row, the taxpayer must be a qualifying resident individual or firm other than an LLP, carry on a profession listed or notified for the provision, and remain within the receipt threshold. The ₹75 lakh ceiling applies only when cash receipts do not exceed 5%; otherwise the ceiling is ₹50 lakh. A job label such as software developer, consultant, designer or writer does not automatically establish a notified profession. Confirm the nature of services and current notification. Business presumptive rows have different turnover and deemed-profit rules.
Tax Computation Under 44ADA
Illustration: ₹30,00,000 eligible professional receipts at the 50% deemed-profit floor gives ₹15,00,000 business income before permitted personal deductions. Under the optional old regime, a supported ₹1,50,000 Section 123/Schedule XV deduction and ₹25,000 Section 126 premium deduction would produce ₹13,25,000 taxable income before other facts. Compare this with the default-regime slabs; do not assume the regime with more deductions is automatically lower.
Advance Tax Under 44ADA
A qualifying presumptive taxpayer can be subject to the single-instalment rule requiring 100% of estimated advance tax by 15 March. Confirm the applicable Section 58 table row and current advance-tax provision; a shortfall can attract statutory interest.
When NOT to Use 44ADA
Normal books may be more appropriate when actual profit is below the presumptive amount, but books and audit requirements depend on Section 63 and the facts. Separate business-expense and depreciation deductions are treated as already reflected in deemed profit. Exceeding the applicable ₹50/₹75 lakh professional threshold removes eligibility. Do not apply the former business-scheme five-year lock-out automatically to the professional row; the table rows have different conditions.
ITR Form and Filing
Use the return form and instructions notified for Tax Year 2026-27. The utility will require the nature of profession, gross receipts, cash/digital split where relevant, deemed or higher profit, and other required disclosures. A lower-than-presumptive declaration can trigger books/audit conditions, but do not assume a legacy ITR-4 name or balance-sheet exemption before reading the current form instructions.
Official References
Source date: 2026-07-28. Confirm later notifications, rules and portal forms before filing or transacting.