Business, professionals and freelancers · Tax Year 2025-26
Presumptive taxation for professionals (section 44ADA)
Under section 44ADA, an eligible professional can declare 50% of gross receipts as income and skip detailed books. The receipts limit is ₹50 lakh, or ₹75 lakh if cash receipts are within 5%. Learn the conditions, an example, and the ITR form.
On this page
Section 44ADA is a presumptive scheme for specified professionals such as doctors, lawyers, architects, engineers, accountants and consultants. You declare 50% of your gross receipts as income, you do not claim expenses separately, and you do not need detailed books of account. On the 2025-26 rules the limit is gross receipts of ₹50 lakh, or ₹75 lakh where cash receipts are not more than 5% of the total.
The figures are for the tax year 2025-26 under the Income-tax Act, 1961. From the tax year 2026-27 the Income-tax Act, 2025 carries the same scheme in section 58 (Table, serial number 3), with the same 50% rate and the same ₹50 lakh and ₹75 lakh limits.
Who can use it
- A resident individual, or a partnership firm other than an LLP. An HUF cannot use 44ADA.
- Engaged in a specified profession: legal, medical, engineering or architectural, accountancy, technical consultancy, interior decoration, or another profession notified by the CBDT. The Income-tax Act, 2025 names information technology and company secretary in the list as well.
- Gross receipts within the limit.
How the income is worked out
Presumptive income = 50% of gross receipts. If your gross receipts are ₹30,00,000, income is ₹15,00,000. This is your professional income. The other 50% is treated as expenses, even if your actual expenses are higher or lower.
Add this to your other income (salary, interest) and compute tax under the old or new regime. See old vs new tax regime.
You may declare more than 50% if your real profit is higher.
Example
Freelance designer, receipts ₹24,00,000 for the year, all by bank transfer. Salary income is nil.
- Presumptive income: 50% × ₹24,00,000 = ₹12,00,000
- New regime: standard deduction applies to salary only, so taxable income is ₹12,00,000. Slab tax is ₹60,000, and the rebate removes it, so tax is nil.
The rebate applies to any resident individual's total income taxed at slab rates, professional income included. With nil tax there is no advance tax to pay either. See rebate under section 87A.
The 5% cash condition
The higher ₹75 lakh limit applies only if cash receipts are not more than 5% of total receipts. Receipts by account-payee cheque, draft or electronic modes are not cash. If cash exceeds 5%, the limit is ₹50 lakh. A cheque or bank draft that is not account-payee counts as cash for this test.
Books and audit
If you declare at least 50%, you need not keep the books of account the law otherwise requires of a specified professional, and the tax audit rules do not apply to that income.
Separately, a professional whose gross receipts exceed ₹50 lakh is within the audit provision of section 44AB.
If you declare less than 50% and your total income is above the basic exemption limit, you must keep books of account and get them audited. The five-year lock-out that applies to small businesses under 44AD is written for the business scheme only; the law does not apply it to 44ADA.
Advance tax
A professional who declares income under 44ADA pays the whole year's advance tax in one instalment by 15 March. Anything paid by 31 March still counts as advance tax for that year. The Income-tax Act, 2025 keeps this rule.
For everyone else the general schedule is 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March, where advance tax of ₹10,000 or more is payable.
ITR form and due date
If the professional income is presumptive and nothing else rules it out, use ITR-4. If other conditions apply, such as foreign assets or a loss to carry forward, use ITR-3. See ITR-3 vs ITR-4.
For business or professional income without audit, the due date from the tax year 2025-26 is 31 August after the tax year (31 August 2026). With audit it is 31 October.
Records you still need
Even without books, keep a record of your receipts: invoices, bank statements and TDS certificates. Clients often deduct TDS on professional fees, and the credit shows in Form 26AS or Form 168. Gross receipts must reconcile with these. See Form 26AS vs Form 168.
How TaxCare helps
TaxCare supports presumptive professional income for ITR-4 and ITR-3, picks the form from your facts, and shows tax under both regimes. It can read TDS on professional fees from your Form 26AS or Form 168 and AIS. If you need books or an audit, a Tax Expert can take over. See Tax Experts.
This guide gives general information and is not professional tax advice.
Questions on this topic
What is section 44ADA?
It is a presumptive scheme for specified professionals. You declare at least 50% of gross receipts as income, and you do not need to keep detailed books of account.
What is the receipts limit?
On the 2025-26 rules, ₹50 lakh, or ₹75 lakh if cash receipts are not more than 5% of total receipts.
Which ITR form do I use?
ITR-4, if the other conditions are met. If not, ITR-3.
Can I declare less than 50%?
Yes, but if your total income is above the basic exemption limit you must then keep books of account and have them audited.
Can I claim expenses under 44ADA?
No. The 50% is after all expenses. You cannot claim separate deductions against it.
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