Presumptive Taxation for Professionals (44ADA)

A doctor, architect, designer or software consultant working alone has receipts, a few expenses and no wish to keep double-entry books. Section 44ADA lets such a professional treat half of gross receipts as profit and stop there. The scheme is narrower than it looks. It is open only to certain professions and certain persons; a Hindu undivided family, for example, is outside it. The receipts ceiling depends on how much came in cash. Declaring less than half brings books and an audit with it. This guide explains who qualifies, how the figure is computed, and what declaring less involves.

Which Act governs which year

• Financial year 2025-26 (assessment year 2026-27) and earlier. The scheme is section 44ADA of the Income-tax Act, 1961.
• Tax year 2026-27 onwards. The counterpart is section 58 of the Income-tax Act, 2025, Table serial number 3, with section 58(3), (4), (6), (9) and (11)(b). The professions are defined in section 62(4).
• Years before 1 April 2026 continue under the 1961 Act by section 536(2) of the 2025 Act.

Who may use the scheme

Section 44ADA(1) applies to “an individual or a partnership firm other than a limited liability partnership”, “who is a resident in India”, engaged in a profession referred to in section 44AA(1). A Hindu undivided family is not named, and neither is a company. In this respect the scheme differs from section 44AD, which admits HUFs. Section 58(11)(b) of the 2025 Act defines the “specified assessee” in the same way: “an individual or a firm, other than a limited liability partnership, who is a resident in India”.

Which professions

Section 44AA(1) names the legal, medical, engineering and architectural professions, accountancy, technical consultancy and interior decoration. It adds “any other profession as is notified by the Board in the Official Gazette”. Rule 6F(1) of the Income-tax Rules, 1962, which prescribes the books these professions keep, lists “authorised representative” and “film artist” alongside the professions named in the section.

The 2025 Act writes more of the list into the statute. Section 62(4) defines “specified profession” as:

“(a) legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology or company secretary; or (b) any other profession, as may be notified by the Board in this behalf.”

Notifications issued under the 1961 Act continue, so far as they are consistent with the 2025 Act, under section 536(2)(j). Whether an occupation is a profession within the list is a question of fact. Section 44AD(6)(i) and section 58(11)(a)(iii) both exclude these professions from the business scheme. The professional scheme is therefore the only presumptive route for them.

The receipts limits

Section 44ADA(1) applies where “total gross receipts do not exceed fifty lakh rupees in a previous year”. The Finance Act, 2023 inserted a proviso with effect from 1 April 2024 (assessment year 2024-25 onwards). It substitutes seventy-five lakh rupees where “the amount or aggregate of the amounts received during the previous year, in cash, does not exceed five per cent of the total gross receipts”. A receipt by a non-account-payee cheque or bank draft “shall be deemed to be the receipt in cash”.

Section 58(2), serial number 3, column D, of the 2025 Act carries both figures: gross receipts that do not exceed fifty lakh rupees, or seventy-five lakh rupees where cash receipts do not exceed 5 per cent of gross receipts. Section 58(9) repeats the rule on cheques and drafts.

As with the business scheme, the test counts only cash received. It differs from the tax audit test in section 44AB, which also counts cash paid.

How the income is worked out

Section 44ADA(1) deems “a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession”, or a higher sum claimed, to be the profits of the profession. There is no lower rate for digital receipts as there is under section 44AD. Section 58(2), serial number 3, column E, reads: “50% of the gross receipts or profit claimed to have been actually earned, whichever is higher.”

Example, for financial year 2025-26: an architect receives Rs 68,00,000, of which Rs 2,00,000 is in cash (2.9 per cent). The Rs 75 lakh limit applies, so the scheme is available, and the deemed profit is Rs 34,00,000. Had cash been Rs 4,00,000 (5.9 per cent), the limit would have been Rs 50 lakh, and the scheme would not have been available at all.

Under section 44ADA(2), deductions under sections 30 to 38 are deemed already allowed. Under section 44ADA(3), the written down value of professional assets is computed as if depreciation had been allowed each year. The 2025 Act’s section 58(4) bars “any loss, allowance or deduction allowable under the provisions of this Act” against the computed income. Section 58(6) carries the written down value rule.

Declaring less than half

Section 44ADA(4) provides that an assessee “who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax” must keep books under section 44AA(1) and “get them audited and furnish a report of such audit as required under section 44AB”. Section 44AB(d) says the same from the audit side.

Unlike section 44AD(4), section 44ADA contains no five-year lock. A professional may use the scheme one year and not the next. The cost of declaring less is books and an audit for that year, where total income is above the exemption limit.

The 2025 Act puts the rule in section 58(3), which covers every assessee in column C of the Table and so includes the specified assessee in serial number 3. Serial number 2 of the Table in section 63(1) also requires an audit where profits are “claimed to be lower than the deemed profits” under section 58(2). The lock in section 58(7) applies only to serial number 1 (business), not to professionals.

Books, audit and the exemption from audit

A professional using the scheme does not escape section 44AA(1) altogether. That sub-section requires every person carrying on a specified profession to keep “such books of account and other documents as may enable the Assessing Officer to compute his total income”. Rule 6F prescribes particular books where gross receipts exceeded Rs 1,50,000 in any of the three preceding years; see Books of Account.

The audit is different. The first proviso to section 44AB, as substituted by the Finance Act, 2023 with effect from 1 April 2024, provides that the section “shall not apply to a person, who declares profits and gains for the previous year in accordance with the provisions of sub-section (1) of … section 44ADA”. Without the scheme, a professional with gross receipts above Rs 50 lakh must be audited under section 44AB(b). Section 63(2) of the 2025 Act grants the same exemption where profits declared are “as per section 58(2)”.

Advance tax and the return

A professional declaring under section 44ADA(1) pays all advance tax in a single instalment by 15 March. Section 211(1)(b) of the 1961 Act and section 408(2) of the 2025 Act (which refers to section 58(2), serial numbers 1 and 3) provide for this. See Advance Tax and Self-Assessment Tax.

For AY 2026-27, Explanation 2 to section 139(1), as substituted by the Finance Act, 2026 from 1 March 2026, gives a due date of 31 August to an assessee with business or professional income whose accounts are not required to be audited. Where accounts must be audited, the due date is 31 October. For AY 2026-27, that date was extended to 21 November 2026 by CBDT Circular No. 07/2026 of 28 September 2026. Section 263(1)© of the 2025 Act sets the same 31 August and 31 October dates for tax year 2026-27 onwards.

What to have ready

• Gross receipts for the year, with the cash portion identified. These come from the receipts register, bank statements and TDS entries in Form 26AS and the AIS. Professional fees are often subject to TDS, so the AIS is a useful cross-check of the receipts figure.
• Confirmation that the activity is a specified profession under section 44AA(1) or section 62(4).
• Confirmation of the person’s status. The person must be resident, and an individual or a non-LLP firm.
• Advance tax paid by 15 March, from e-Pay Tax Payment History.
• Books under section 44AA(1) and rule 6F, where applicable, even though the scheme is used.
• If a lower profit is to be declared, books and an audit report under section 44AB before the specified date.

Filing

ITR-4 (Sugam) is available to a resident individual or firm (other than LLP) with presumptive income under section 44ADA and total income up to Rs 50 lakh, subject to the exclusions listed on the e-filing portal (directors, unlisted shares, foreign assets or income, losses and others). Others use ITR-3 or ITR-5. A step-by-step walkthrough is in Filing ITR-4 for a Freelance Professional under Section 44ADA. The return must then be verified; see E-Verifying a Return.

What can and cannot be changed afterwards

A return can be revised within the time in section 139(5), and an updated return is possible in the cases set out in The Updated Return (ITR-U). A revision that declares less than 50 per cent brings section 44ADA(4) into play for that year. Section 44ADA(4) requires books and an audit report under section 44AB, and section 44AB requires the report by the specified date. Revisions and late returns are covered in Belated and Revised Returns.

Summary

1. Fix the Act: section 44ADA for FY 2025-26 and earlier; section 58(2), serial number 3, from tax year 2026-27.
2. Check the person: a resident individual or a non-LLP firm. HUFs and companies are excluded.
3. Check the profession: those in section 44AA(1) and notified ones; under the 2025 Act, section 62(4), which names information technology and company secretary.
4. Check receipts: up to Rs 50 lakh, or Rs 75 lakh if cash received is within 5 per cent of gross receipts (AY 2024-25 onwards).
5. Compute 50 per cent of gross receipts, or a higher actual figure.
6. Declaring less, with income above the exemption limit, requires books and an audit for that year. There is no five-year lock.
7. Pay advance tax by 15 March, file by 31 August for AY 2026-27 (non-audit cases), and verify.

The next guide covers the scheme for owners of goods carriages under section 44AE.