# Presumptive Tax (44ADA/44AD)

> Presumptive taxation lets small businesses and professionals declare a fixed percentage of turnover as profit and skip detailed books and audit. Professionals under Section 44ADA declare 50% of gross receipts (limit ₹75 lakh if cash receipts are within 5%, else ₹50 lakh). Businesses under Section 44AD declare 6% of digital and 8% of cash turnover (limit ₹3 crore if cash receipts are within 5%, else ₹2 crore).

Interactive calculator: https://www.industax.com/calculators/presumptive-tax

- **44ADA professionals:** 50% deemed profit
- **44AD business:** 6% digital / 8% cash
- **Advance tax:** One instalment, 15 March

## Presumptive schemes compared

| Scheme | Who | Turnover limit | Deemed profit |
| --- | --- | --- | --- |
| 44ADA | Doctors, lawyers, CAs, engineers, architects, consultants, designers, IT and other specified professionals | ₹75 lakh (cash ≤ 5%), else ₹50 lakh | 50% of gross receipts |
| 44AD | Resident individuals, HUFs and firms (not LLPs) in eligible businesses | ₹3 crore (cash ≤ 5%), else ₹2 crore | 6% of digital, 8% of cash turnover |
| 44AE | Goods carriage owners with up to 10 vehicles | No turnover limit | ₹1,000 per tonne per month (heavy) or ₹7,500 per vehicle per month |

## Conditions to watch

- You can declare higher profit than the presumptive rate, but not lower without audit
- Opting out of 44AD in a later year locks you out for the next five years
- Pay all advance tax by 15 March
- File ITR-4 (or ITR-3 if you have other income ITR-4 doesn't allow)
- Freelancers in IT and design usually fall under 44ADA as specified professions

## Worked example: freelance developer under 44ADA

1. Gross receipts ₹40,00,000, all by bank transfer.
2. Deemed profit at 50% = ₹20,00,000 (no expense proof needed).
3. New regime tax on ₹20 lakh ≈ ₹2,00,000 + 4% cess.

**Result:** Tax ≈ ₹2.08 lakh — paid by 15 March as a single advance tax instalment.

## FAQs

### Can a freelancer with foreign clients use 44ADA?

Yes, if the work is a specified profession or notified profession, gross receipts are within the limit and you are a resident. Foreign clients don't change eligibility.

### Do I need to maintain books under 44ADA?

Not the detailed books required under Section 44AA, but you should keep invoices and bank records to support your receipts.

### Is GST separate from presumptive tax?

Yes. Presumptive taxation is an income tax concept. GST registration depends on your turnover and type of supply — services above ₹20 lakh, or any export of services if you want to export without paying IGST under LUT.

## Official sources

- incometaxindia.gov.in: https://www.incometaxindia.gov.in/

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Canonical page: https://www.industax.com/calculators/presumptive-tax
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.