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Income Tax · Glossary

Section 44ADA

Presumptive taxation scheme for specified professionals — 50% of gross receipts is deemed profit.

Updated 2026-10-08Source: Income-tax Act · CGST Act · CBDT/CBIC

What it means

Section 44ADA of the Income Tax Act, 1961 lets the specified professions (legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, and the CBDT-notified information technology, company secretary, film artist and authorised representative) declare 50% of their gross receipts as taxable profit — no books, no audit, no actual-expense tracking required. From tax year 2026-27 the same scheme is s.58(2) (Table Sl. No. 3) of the Income-tax Act 2025.

Gross receipts ceiling: Rs. 50 lakh in standard mode, Rs. 75 lakh if cash receipts are no more than 5% of the total (bank transfer, UPI, account-payee cheque and card count as non-cash) — the higher limit came with the Finance Act 2023. There is no lock-in: a professional can leave 44ADA to claim actual expenses one year and return the next (the five-year bar in Section 44AD(4) applies to the business scheme only).

A worked example

An IT consultant’s tax-year 2026-27 gross receipts: Rs. 24 lakh, all bank/UPI. Because information technology is a specified profession, the presumptive scheme (s.58, formerly 44ADA) is open: taxable income = 50% = Rs. 12 lakh. New-regime tax on Rs. 12 lakh (Rs. 60,000) is fully offset by the Rs. 60,000 rebate (s.156, formerly 87A) → final tax = zero (plus Rs. 0 cess).

Decide each year on that year's numbers: 44ADA has no lock-in (the five-year bar is Section 44AD(4), for businesses). In a year of genuinely high expenses, books and actual profit may win — just budget for the books and, above the basic exemption limit, the audit that declaring under 50% brings.

Run it on your own numbersFree 44ADA Calculator — no signup.

FAQ

Who counts as a "specified professional" under 44ADA?
Legal, medical, engineering, architecture, accountancy, technical consultancy and interior decoration are named in Section 44AA(1). The CBDT has notified four more under it: authorised representative and film artist (1977), company secretary (1992) and information technology (2001) — so software developers and IT consultants qualify as information technology. The Income-tax Act 2025 names information technology and company secretary in the list itself (s.62(4)). Design, writing, marketing and coaching are not on it; whether 44ADA covers them is contested, so confirm with a CA.
Can I claim Section 80C deductions on top of 44ADA?
Yes — 44ADA gives you the gross-to-taxable conversion; Chapter VI-A deductions (80C, 80D, etc.) apply on top in the OLD regime. The NEW regime disallows most Chapter VI-A so the order doesn’t matter there — your effective income is still 50% of receipts.

Going deeper: Complete Tax Guide for Freelancers in India (2026-27) — 15 min read.

Look up the details

Track receipts and compute 44ADA tax in HourSlip →Built into HourSlip — free to start.

Sources

Income-tax entries cite the Income-tax Act 1961, which governs FY 2025–26 (the return filed in 2026); from tax year 2026–27 the Income-tax Act 2025 applies, with new section numbers shown where we give them. GST law is unchanged. General information, not tax advice; verify with your CA before you file.

Related terms

Income Tax

Section 44AD

Presumptive taxation for small businesses — 8% (or 6% if non-cash) of turnover is deemed profit.ITR

ITR-4 (Sugam)

Income tax return form for individuals on presumptive taxation (44AD/44ADA/44AE).Concepts

Presumptive Taxation

Tax scheme where profits are presumed at a fixed percentage of receipts, no books required.

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