Declare 50% of gross receipts as profit, skip expense tracking, avoid a mandatory audit. Calculate your exact tax liability and advance tax schedule below.
Presumptive tax under Section 44ADA of the Income Tax Act lets the government "presume" your profit to be 50% of your gross professional receipts — without requiring you to prove it with expense records. You declare that 50% as taxable income and pay slab tax on it.
Consider a software consultant earning ₹30 lakhs per year:
Key insight: If your real business expenses are less than 50% of revenue — common for solo developers, writers, designers — you pay less tax under 44ADA than under regular taxation, even without deducting actual expenses. The government's presumed deduction is generous for low-overhead service professionals.
Content writers, social media managers, and gig economy workers are typically not on the specified list. They should evaluate Section 44AD (businesses under ₹3 crore) instead.
Most tech and consulting freelancers receive 100% digitally and qualify for the ₹75 lakh limit.
GST and income tax are entirely separate obligations. Qualifying for 44ADA does not exempt you from GST registration or compliance.
If your aggregate annual turnover exceeds ₹20 lakhs (₹10 lakhs in special category states), you must register for GST. For exported services (billing foreign clients), you can supply under a Letter of Undertaking (LUT) at zero GST.
The ₹75 lakh threshold is calculated on receipts excluding GST. Example: you billed ₹80L total including 18% GST:
| Parameter | Section 44ADA | Regular Taxation |
|---|---|---|
| Books of accounts | Not required | Mandatory |
| Expense tracking | Not needed | Must track and document all expenses |
| Tax audit | Not required if profit ≥ 50% | Required if receipts exceed ₹50L |
| Taxable profit | Fixed: 50% of gross receipts | Actual profit (receipts minus expenses) |
| ITR form | ITR-4 (Sugam) | ITR-3 (complex) |
| Advance tax | Single payment by Mar 15 | Must pay quarterly |
| Receipts limit | ₹75L (digital) / ₹50L (cash) | No upper limit |
Break-even point: If your real business expenses are less than 50% of revenue, 44ADA wins. If actual expenses exceed 50%, regular taxation with documentation may yield lower tax.
If your total estimated tax liability exceeds ₹10,000, you must pay advance tax. Under 44ADA, you may pay the full amount in a single installment by March 15 instead of following the quarterly schedule.
| Due Date | Cumulative % | Installment |
|---|---|---|
| 15 June 2026 | 15% | 15% of annual tax |
| 15 September 2026 | 45% | 30% of annual tax |
| 15 December 2026 | 75% | 30% of annual tax |
| 15 March 2027 | 100% | 25% of annual tax |
Late installments attract 1% per month interest under Section 234C. Missing 90% by March 31 triggers Section 234B interest on total outstanding.
Are you a salaried professional with ESOPs or RSUs? → Calculate your ESOP / RSU tax liability