Discovery: Presumptive Tax Calculator (India)

JTBD

“How much tax do I owe under presumptive taxation, and should I opt for 44AD/44ADA or maintain regular books?”

Market Context (FY 2025-26)

Section 44AD — Business Presumptive Taxation

Deemed Profit Rates

• 6% of turnover received through digital/banking channels (account payee cheque, demand draft, ECS, UPI, NEFT, RTGS, bank transfer)
• 8% of cash turnover (receipts not through banking channels)
• Non-account payee cheques/drafts are treated as cash for this purpose

Turnover Limits

• Rs 3,00,00,000 (3 crore) if cash receipts do not exceed 5% of total turnover/gross receipts
• Rs 2,00,00,000 (2 crore) if cash receipts exceed 5%
• Enhanced limit of 3 crore introduced by Finance Act 2023

Eligibility

• Resident individuals
• Hindu Undivided Family (HUF)
• Partnership firms (excluding LLP)
• NOT eligible: Companies, LLPs, non-residents
• Excluded businesses: Plying/hiring/leasing goods carriages (covered under Section 44AE), agency business, commission/brokerage income

5-Year Lock-in Rule

• If you opt for 44AD and subsequently declare income below the prescribed rate (6%/8%), you are locked out of 44AD for the next 5 assessment years
• During lock-out, must maintain full books of accounts
• Tax audit mandatory if profit < 44AD rate and turnover exceeds audit threshold

Section 44ADA — Professional Presumptive Taxation

Deemed Profit Rate

• 50% of gross professional receipts is deemed as taxable profit
• Cannot declare income lower than 50% under this scheme (if you do, must maintain books + audit)

Receipts Limit

• Rs 75,00,000 (75 lakh) if 95% or more receipts are through digital/banking channels
• Rs 50,00,000 (50 lakh) if digital receipts are below 95%
• Enhanced limit of 75 lakh introduced by Finance Act 2023

Eligible Professions (Section 44AA(1))

1. Legal professionals (lawyers, advocates)
2. Medical professionals (doctors, dentists, physiotherapists)
3. Engineering professionals
4. Architects
5. Chartered Accountants, Company Secretaries, Cost Accountants
6. Technical consultancy
7. Interior decoration
8. Any other profession notified by CBDT (currently: authorised representative, film artist, information technology)

5-Year Lock-in Rule (Section 44ADA(4))

• Same as 44AD: opting out locks you out for 5 subsequent assessment years
• Must maintain books and get audit if required during lock-out

Tax Slabs (FY 2025-26)

New Regime (default from FY 2023-24)

• Section 87A rebate: up to Rs 60,000 if total income <= Rs 12,00,000
• Standard deduction of Rs 75,000 is NOT available for self-employed/business persons

Old Regime

• Section 87A rebate: up to Rs 12,500 if net taxable income <= Rs 5,00,000
• Section 80C deduction: up to Rs 1,50,000

Surcharge

Cess

• Health & Education Cess: 4% on (income tax + surcharge)

Advance Tax for Presumptive Assessees

• Single instalment: 100% of tax liability by 15 March of the financial year
• Standard quarterly schedule (15 Jun, 15 Sep, 15 Dec, 15 Mar) does NOT apply
• Interest under Section 234C for late/short payment
• TDS credits reduce the advance tax obligation

ITR Filing

• 44AD/44ADA: File ITR-4 (Sugam) — simplified, no financial statements required
• Regular books: File ITR-3 — requires P&L, Balance Sheet
• Deadline: 31 July of assessment year (31 October if audit required)

Tax Audit Thresholds (Section 44AB) — If NOT Opting for Presumptive

• Business: Turnover > Rs 1 crore (Rs 10 crore if >95% digital transactions)
• Profession: Gross receipts > Rs 50 lakh

Calculator Tabs

Tab 1: 44AD Business Tax

JTBD: “I run a business — what’s my tax under presumptive scheme?”

Inputs:

• Digital turnover (Rs) — default 1.5 Cr
• Cash turnover (Rs) — default 5L
• Tax regime (New/Old)
• Section 80C deduction (old regime only)

Outputs:

• Presumptive profit (6% digital + 8% cash)
• Tax breakdown (base + surcharge + cess)
• Effective tax rate on turnover
• Advance tax due date
• Eligibility check (turnover vs limit)

Tab 2: 44ADA Professional

JTBD: “I’m a professional — what’s my tax under 44ADA?”

Inputs:

• Gross receipts (Rs) — default 30L
• Profession type
• Digital receipts % — default 100%
• Tax regime (New/Old)
• Section 80C deduction (old regime only)

Outputs:

• Presumptive profit (50%)
• Tax breakdown
• Effective tax rate on receipts
• Take-home after tax
• Eligibility check

Tab 3: Presumptive vs Regular

JTBD: “Should I opt for presumptive or maintain regular books?”

Inputs:

• Turnover/receipts (Rs)
• Actual expenses (Rs)
• Section (44AD or 44ADA)
• Digital receipts %

Outputs:

• Tax under presumptive (both regimes)
• Tax under regular (both regimes)
• Tax savings comparison
• Break-even expense level
• Compliance requirements (books, audit, ITR form)

Sources

• Income Tax Act, 1961 — Sections 44AD, 44ADA, 44AB, 44AA
• Income Tax Department (incometax.gov.in) — ITR-4 FAQs, presumptive taxation tutorial
• Finance Act 2023 (enhanced limits: 3Cr/75L for digital)
• Union Budget 2025 (new regime slab changes, 87A rebate enhancement)
• CBDT notifications on notified professions

Verify

• Confirm no Budget 2026 changes to 44AD/44ADA rates or limits
• Check if LLP eligibility has been expanded (currently excluded)
• Verify surcharge marginal relief computation (not implemented in v1)
• Check if CBDT has notified any new professions under 44AA(1)