✅ Are You Eligible for Section 44ADA?
Yes, you are eligible for Section 44ADA if:
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You are an individual or partnership firm (not LLP or company).
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You are a resident in India.
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You are offering professional services — and engineering design services fall under "technical consultancy," which is covered.
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Your gross receipts (total payments) from freelancing are below ₹75 lakhs (limit increased from ₹50 lakhs with digital receipts in mind).
💡 So YES — you can opt for presumptive taxation under Section 44ADA.
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Under this, 50% of your receipts are considered as taxable income.
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You don’t need to maintain detailed books of accounts.
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No audit required if you declare 50% or more as profit and total income is under ₹2.5L / ₹3L / ₹5L depending on age slab.
💰 Do You Need to Pay Both GST and Income Tax?
🔹 Income Tax:
Yes — you have to pay Income Tax on your income under Section 44ADA.
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If your income (50% of gross receipts) exceeds basic exemption limit, you pay tax.
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Tax slabs (FY 2024–25 under old regime):
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Up to ₹2.5L: Nil
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₹2.5L–₹5L: 5%
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₹5L–₹10L: 20%
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Above ₹10L: 30%
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You can also opt for the new regime if beneficial (0–15–30% slab).
🔹 GST:
Yes — if your gross turnover exceeds ₹20 lakhs (in most states) for services.
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You need to register for GST if your freelance income > ₹20L annually.
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GST Rate: 18% for engineering or technical consultancy services (SAC 9983).
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You can charge GST from clients and claim Input Tax Credit (ITC).
🔁 Income tax and GST are separate — income tax is on your profit; GST is on your service value.
✍️ Example Breakdown
You earn ₹18 lakhs from clients (fully online transfers), all under Section 44ADA.
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Presumptive income = 50% of ₹18L = ₹9L
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Taxable after deductions = ₹9L – deductions (if applicable)
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Income tax = based on slab (approx. ₹1L–₹1.2L if no other income or exemptions)
If your income crosses ₹20L, you must:
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Register under GST
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Collect 18% GST from clients
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File monthly/quarterly returns
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Pay GST after adjusting ITC
🧾 Summary Table
| Tax Type |
Applicability |
Threshold |
Rate |
| Income Tax |
Yes, under Sec 44ADA |
> ₹2.5L income |
Slab-wise (5–30%) |
| GST |
Yes, if gross > ₹20L |
₹20L turnover |
18% on services |
🤔 FAQ
Q: Can I opt out of GST if I work with international clients?
A: You may qualify for export of services (zero-rated), but GST registration is still needed if turnover > ₹20L.
Q: Can I claim expenses even under Sec 44ADA?
A: No, Sec 44ADA assumes 50% is expense — separate expense claims are not allowed.
Q: What if I earn ₹19L but don’t register for GST?
A: You’re fine — registration is required only if you cross ₹20L.
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