Section 44AD & 44ADA Presumptive Taxation: Eligibility, Turnovers & Filing Rules

Relief from Bookkeeping: The Presumptive Taxation Regime

Under Sections 44AD and 44ADA of the Income-tax Act, 1961, the Government provides a simplified taxation mechanism designed to relieve small traders, shopkeepers, contractors, doctors, lawyers, and consultants from the burdensome task of maintaining exhaustive account books and undergoing statutory tax audit under Section 44AB.

Section 44AD for Businesses (Retailers, Traders, Wholesalers)

• Turnover Limit: Up to ₹2 Crore (increased to ₹3 Crore where total cash receipts do not exceed 5% of gross turnover).
• Deemed Minimum Profit:
  • 8% of gross turnover for cash or bearer transactions.
  • 6% of gross turnover for digital transactions received via account payee cheque, bank draft, NEFT, RTGS, IMPS, or UPI.
• Applicable Form: ITR-4 (Sugam).

Section 44ADA for Professionals (Doctors, CAs, Lawyers, Architects, Tech Consultants)

• Gross Receipts Limit: Up to ₹50 Lakh (increased to ₹75 Lakh where cash receipts do not exceed 5%).
• Deemed Minimum Profit: Flat 50% of gross receipts declared as taxable professional income.
• Advance Tax Rule: Eligible professionals under 44ADA are exempt from paying advance tax in four installments; they can pay 100% of their advance tax in a single installment on or before March 15th.