Section 44ADA of the Income Tax Act is the most useful provision for freelancers and independent professionals in India. It eliminates complex bookkeeping, reduces compliance burden, and allows professionals to pay tax on a deemed 50% of their gross receipts - without proving actual expenses.
What is Presumptive Taxation?
Presumptive taxation is a simplified scheme where the government presumes a fixed percentage of your gross receipts to be your profit - and taxes you on that. You do not need detailed books of accounts or a tax audit within specified limits. Section 44ADA applies specifically to specified professionals - 50% of gross professional receipts is deemed profit.
Who Can Use Section 44ADA?
You can opt for Section 44ADA if you are a resident individual (or Hindu Undivided Family or Partnership Firm, excluding LLPs) engaged in a specified profession and gross receipts do not exceed Rs 75 lakh in FY 2025-26.
Specified professions under Section 44ADA:
| Profession | Examples |
|---|---|
| Medical | Doctors, dentists, physiotherapists, surgeons |
| Engineering | Civil, mechanical, electrical, structural engineers |
| Architectural | Architects, urban planners, interior designers |
| Legal | Solicitors, notaries, legal consultants |
| Accountancy | Chartered accountants, cost accountants, company secretaries |
| Technical consultancy | IT consultants, management consultants, technical advisors |
| Information technology | Software developers, coders, IT professionals |
| Film artists | Actors, directors, script writers, cameramen |
| Authorized representatives | Tax representatives, company law practitioners |
How Section 44ADA Works - Example
| Item | Details |
|---|---|
| Gross receipts from freelancing | Rs 22,00,000 |
| Deemed profit (50%) | Rs 11,00,000 |
| Other income (FD interest) | Rs 50,000 |
| Total income before deductions | Rs 11,50,000 |
| Less: Section 80C | Rs 1,50,000 |
| Less: Section 80D | Rs 25,000 |
| Taxable income | Rs 9,75,000 |
| Tax under New Regime (approx.) | Rs 62,500 + 4% cess |
| Books of accounts required? | No |
| Tax audit required? | No |
| ITR form | ITR-4 (Sugam) |
Even if your actual expenses are less than Rs 11 lakh (the deemed 50%), you automatically get the 50% deduction. If actual expenses are less than 50%, this scheme is very beneficial.
When Section 44ADA is NOT Beneficial
If actual expenses exceed 50% of gross receipts (rent, salaries paid to staff, heavy equipment), regular taxation via ITR-3 with actual expense deduction may result in lower tax. Calculate both scenarios before choosing.
Can You Declare More Than 50% Profit?
Yes - Section 44ADA specifies a minimum of 50%. You can declare higher profit if your actual profit exceeds 50%. You cannot declare less than 50% without opting out of the presumptive scheme.
Advance Tax Under Section 44ADA
If you opt for Section 44ADA, advance tax is simplified - pay 100% of advance tax in one installment by 15 March 2026 instead of four quarterly installments. This is a significant practical advantage for freelancers.
What If Gross Receipts Exceed Rs 75 Lakh?
If professional receipts exceed Rs 75 lakh in FY 2025-26, you cannot use Section 44ADA. You must maintain full books and file ITR-3. Tax audit under Section 44AB becomes mandatory.
Filing Under Section 44ADA - Use ITR-4
Select ITR-4 (Sugam) on the portal. Choose your profession and enter gross receipts. The portal automatically computes 50% as your deemed profit. Add Chapter VI-A deductions, choose your tax regime, and submit.
Get Your 44ADA Filing Done Right - Regikart
While ITR-4 seems simple, many freelancers make errors - wrong profession code, wrong GST reconciliation, missed TDS credits. Regikart's CA team ensures your 44ADA filing is clean, compliant, and tax-optimised.
| Ready to File Your ITR for FY 2025-26? Let Regikart's CA team handle it, accurately and on time. File Your ITR with Regikart: https://regikart.com/tax-filing Call / WhatsApp: +91 70444 94804 | Email: [email protected] |
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Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws may change. Please consult a qualified Chartered Accountant for advice specific to your situation.
About the author
CA Deepak Jaiswal
Founding Partner, FCA at Regikart. Want to discuss this in the context of your business?
