Presumptive Taxation for Professionals, covered under Section 44ADA of the Income Tax Act, is a simplified tax scheme designed for small professionals in India. It allows eligible professionals like doctors, lawyers, CAs, and consultants to declare 50% of their gross receipts as taxable income without maintaining detailed books of accounts.
This scheme reduces compliance burden, saves time, and makes tax filing easier—especially for freelancers and self-employed professionals with limited resources.
Who can opt for it?
This scheme is only for specified professionals, such as
- Chartered Accountant
- Advocate/Lawyer
- Doctor
- Engineer
- Architect
- Interior Decorator
- Technical Consultant
- Film artist
- Any other notified professional
**Basically, professional income, not business income.
Turnover/Gross Receipts Limit
Under Section 44ADA, the turnover or gross receipts limit for opting into presumptive taxation is up to ₹75 lakh in a financial year, provided that cash receipts do not exceed 5% of the total gross receipts. However, if the cash receipts exceed this 5% threshold, the maximum permissible limit is reduced to ₹50 lakh. This condition encourages digital transactions and determines the eligibility of professionals to avail the benefits of the presumptive taxation scheme.
How income is calculated?
Under Section 44ADA, the calculation of income is straightforward. Fifty percent of the gross receipts of the professional is deemed to be the taxable income, while the remaining 50% is considered as expenses, irrespective of the actual expenditure incurred. There is no requirement to maintain bills or detailed records of expenses.
For example, if the gross receipts during the financial year are ₹30,00,000, then ₹15,00,000 (50%) will be treated as the taxable income under the presumptive taxation scheme.
Can you declare lower income than 50%?
Yes, but then:
- You must maintain books of accounts
- Tax audit may be applicable (if income exceeds basic exemption limit)
Major Benefits
✔ No detailed books of accounts
✔ No expense bills required
✔ Simple compliance
✔ Ideal for freelancers & small professionals
Advance Tax Rule
Under the advance tax provisions applicable to Section 44ADA, professionals opting for the presumptive taxation scheme are required to pay the entire amount of advance tax on or before 15th March of the financial year. Unlike regular taxpayers, there is no requirement to pay advance tax in quarterly installments, which further simplifies compliance and reduces the procedural burden for professionals.
Who cannot opt for Section 44ADA?
- Professionals having receipts above the threshold.
- Those who want to claim actual expenses higher than 50%
- Commission agents / business income (they fall under 44AD, not 44ADA)
Applicable ITR Form
Professionals opting for the presumptive taxation scheme under Section 44ADA are required to file their income tax return using ITR-4 (Sugam).
This return form is specifically designed for taxpayers who declare income on a presumptive basis and helps ensure simpler and faster filing with minimal disclosure requirements compared to regular ITR forms.
FAQs: Presumptive Taxation for Professionals (Section 44ADA)
1. What is presumptive taxation for professionals?
Presumptive taxation under Section 44ADA is a simplified tax scheme that allows eligible professionals to declare 50% of their gross receipts as taxable income, without maintaining detailed books of accounts.
2. Who is eligible to opt for Section 44ADA?
Specified professionals such as doctors, lawyers, chartered accountants, engineers, architects, interior designers, and consultants can opt for this scheme.
3. What is the maximum gross receipts limit under Section 44ADA?
Professionals can opt for this scheme if their gross receipts do not exceed ₹75 lakh in a financial year (₹50 lakh if cash receipts exceed 5% of total receipts).
4. Is it mandatory to declare exactly 50% of income?
No, it is not mandatory. You may declare income lower than 50%, but in such cases, you must maintain books of accounts and may be required to get them audited, if applicable.
5. Are actual expenses allowed to be claimed separately?
No. Under Section 44ADA, 50% of receipts are deemed as expenses, and no separate deduction for actual expenses is allowed.
6. Which ITR form is applicable for Section 44ADA?
Professionals opting for presumptive taxation must file ITR-4 (Sugam).
7. Is advance tax applicable under this scheme?
Yes. The entire advance tax must be paid on or before 15th March of the financial year. Quarterly installments are not required.
8. Can a professional switch between presumptive and regular taxation?
Yes. Unlike Section 44AD, there is no restriction period for opting in or out of Section 44ADA.
9. Is GST registration affected by opting for Section 44ADA?
No. GST compliance is independent of income tax provisions. Opting for Section 44ADA does not exempt a professional from GST registration or filing.
10. Who should avoid opting for Section 44ADA?
Professionals who have actual expenses higher than 50%, or whose gross receipts exceed the prescribed limit, should avoid this scheme.
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