What is presumptive taxation under 44AD and 44ADA?
Presumptive taxation lets small businesses and professionals declare income as a fixed percentage of receipts without maintaining detailed books. Under Section 44AD, businesses with turnover up to ₹3 crore declare 8% of receipts (6% for digital receipts). Under 44ADA, professionals with receipts up to ₹75 lakh declare 50% of receipts as income.
1Section 44AD (business)
For eligible businesses with turnover up to ₹3 crore (where 95%+ receipts are digital). Income is presumed at 8% of turnover, or 6% for digital/banking receipts. No need to maintain books or audit if you declare at or above this.
2Section 44ADA (professionals)
For professionals (doctors, lawyers, architects, etc.) with gross receipts up to ₹75 lakh (95%+ digital). Income is presumed at 50% of receipts. You file ITR-4 and pay advance tax in one instalment by 15 March.
Frequently asked questions
Can I declare lower income than the presumptive rate?
Yes, but then you must maintain books of account and get a tax audit if your income exceeds the basic exemption. Most small taxpayers find the presumptive scheme simpler.
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General information for AY 2026-27, not professional advice. Laws change with each Finance Act, notification or amendment and depend on your specific facts — verify the current position with a licensed CA or advocate before acting.