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44ADA or 44AD for App Store app sales (194O TDS) and client software development work?

1002 views 3 replies

Hardik Bhalodi

Owner

33 Points Posted on 06 April 2026

I am a sole proprietor and was filing under Section 44ADA last year.

This year I have:

Client-based software development income (about 25%)
App store income (about 75%) where TDS is deducted under Section 194O

My question is:

Should I:

Continue using Section 44ADA for the client service income, and
Use Section 44AD for the app store income?

Or should I use only one section for the entire income?

Please advise the correct approach.

Replies (3)

Quick Summary

Use both sections: 44ADA for client software services and 44AD for app store income (194O TDS). Report separately with proper business codes to ensure correct presumptive taxation and compliance.

Aashok FC Advisory

Finance Compliance Consultant

925 Points Posted on 06 April 2026

👉 Use 44ADA for client services + 44AD for app store income — both together is correct.

Hardik Bhalodi

Owner

33 Points Posted on 06 April 2026

Thank you for your guidance.

I have one follow-up question:

For client software development under 44ADA, I understand 14001 – Software Development is appropriate.

For app store income under 44AD (with 194O TDS), which code should I use:

14004 – Database activities and distribution of electronic content, or
09028 – Retail sale of other products n.e.c.?

Or should I use a single code for both?

Please advise.

Tax Garden

Tax Consultant

516 Points Posted on 08 May 2026

For app store sales where the marketplace deducts TDS under 194O, the income is typically treated as business income and can fall under 44AD. Income from client software development projects, where you are providing technical consultancy, generally fits 44ADA as professional income.
Both sections can apply in the same year for genuinely different income streams, and ITR-4 lets you fill 44AD and 44ADA schedules separately. The key rule is that you cannot bundle both types into a single scheme.