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Three schemes, now in one section
| Scheme | Who | Limit | Deemed income |
|---|---|---|---|
| 44AD | Resident individuals, HUFs, firms (not LLPs) in business | Turnover up to ₹2 crore — ₹3 crore if cash receipts are within 5% | 8% of turnover; 6% of digital receipts |
| 44ADA | Resident professionals — doctors, lawyers, CAs, engineers, architects, consultants and others notified | Receipts up to ₹50 lakh — ₹75 lakh if cash within 5% | 50% of receipts |
| 44AE | Owners of up to 10 goods vehicles | — | ₹1,000 per ton per month (heavy vehicles); ₹7,500 per vehicle per month (others) |
Why people choose it
- No detailed books of account or tax audit, if you declare at least the presumptive rate.
- Advance tax in one instalment by 15 March.
- Simple return — ITR-4, if total income is up to ₹50 lakh and other conditions are met.
The five-year trap
If you opt for s.44AD→s.58 and then declare lower profit in any of the next five years, you cannot use it again for five years — and if your income exceeds the basic exemption limit, you must maintain books and get them audited. Decide based on your real margins, not just convenience.
When it is the wrong choice
- Your real profit is well below 8% (or 50% for professionals) — you will pay tax on income you never earned.
- You have large losses to carry forward, or need detailed accounts for a bank loan.
- You are an LLP or a company — not eligible.
- Commission or brokerage income and certain agency businesses are excluded from 44AD.
GST is separate
Presumptive income tax does not change GST. If your turnover crosses the GST threshold, you still need registration and returns. Estimate your presumptive income in the presumptive income calculator.
Founder, VJ & Associates, Jind — Taxation Lawyer & Legal Consultant, backed by the firm's Chartered Accountants, Company Secretaries and Tax Advocates. About the author · vinujaglan.com
General information as on 10 Nov 2026, not advice for your specific case. Laws, rates and dates change — see the disclaimer.
