Section 44ADA of the Income Tax Act allows certain professionals and freelancers (such as Software developers, Designers, Consultants, Engineers, Architects, Doctors, Lawyers, Chartered accountants, Technical professionals, Content creators / digital consultants) to use presumptive taxation.
If you choose to file income tax under presumptive taxation, the government automatically assumes 50% of their revenue is expenses, so only the remaining 50% is treated as taxable income without maintaining any books such as:
- No Balance Sheet.
- No Income or Expenditure.
So the rule becomes:
Taxable Income = 50% of Gross Receipts
Example:
| Revenue | Expense | Taxable Income |
| 24,00,000 | 12,00,000 | 12,00,000 |
Key Rules
- You must be resident professional in India.
- Gross receipts must be up to Rs.75 lakh for FY 2025-26. This limit is available if cash receipts is only 5% of the total receipts.
- At least 50% income declared as profit.
- If you declare profit less than 50% of your receipts then you must have to maintain books of accounts and may need to get them audited. Also if they exceed the limit of gross receipt, then they cannot opt for presumptive taxation.
New Tax Regime Rebate
Under the new tax regime, if taxable income is up to Rs.12L - you can completely offset the tax liability using rebate under Section 87A.
This means the final income tax payable can become Rs.0 if the taxable income stays within that rebate limit.
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