PRESUMPTIVE TAX SECTION 44AD

Section 44AD for small businesses

Shops, traders, and other small businesses under the turnover cap can use Section 44AD and declare 8% of turnover as profit, or 6% when the customer pays by account-payee cheque, account-payee draft, or an electronic mode. You do not keep expense books for that profit, and you are not audited under Section 44AB while you stay on the scheme. The figures below are for FY 2026-27. The CBDT page is labelled AY 2026-27. This page is about FY 2026-27, which is AY 2027-28, so check that the table still matches the year you file.

Official sources

Presumptive scheme for small businesses and professions (page labelled AY 2026-27). Section 44AD: 8% of total turnover or gross receipts, or 6% when that amount is received by account-payee cheque, account-payee bank draft, electronic clearing, or another prescribed electronic mode. The cap is ₹2 crore. It is ₹3 crore if cash received in the year is not more than 5% of turnover or gross receipts. A cheque or draft that is not account-payee counts as cash. Opting in means no audit under Section 44AB, and advance tax in one payment on or before 15 March.
Rebate under Section 87A (resident benefits table, page labelled AY 2026-27)
Income-tax return forms, including ITR-4 and ITR-3

How 44AD works

You pay tax on a fixed share of turnover. The share depends on how the customer paid. A notified profession uses Section 44ADA (50% of receipts), not this section.

Cash

of that turnover is profit

Account-payee or electronic

of that turnover is profit

Cash here includes a cheque or bank draft that is not account-payee. Account-payee cheque, account-payee draft, and electronic receipts use 6%. The bank record for those payments is what the lower rate is for.

Example. Turnover is ₹40 lakh. ₹36 lakh (90%) came by digital modes. ₹4 lakh (10%) came in cash.

→ Digital: ₹36 lakh × 6% = ₹2,16,000
→ Cash: ₹4 lakh × 8% = ₹32,000
→ Taxable profit: ₹2,48,000 out of ₹40 lakh turnover

Turnover limits

The cap depends on how much of the year's receipts were in cash.

Case	Turnover limit	Condition
Usual cap	₹2 crore	Any mix of cash and other payments
Higher cap	₹3 crore	Cash received in the year is 5% or less of turnover or gross receipts

A cheque or draft that is not account-payee counts toward that 5%. Above the cap that applies to you, or if you do not want 44AD, you keep regular books. You may also need a tax audit under Section 44AB.

Advance tax by 15 March

On 44AD, advance tax is one payment of the whole estimate, due on or before 15 March. Section 44ADA uses the same date. The quarterly dates below are for a regular ITR-3 filer who is not on either section.

44AD and 44ADA

15 March

One payment of the year's estimated tax

Due date	Cumulative share, if not on 44AD or 44ADA
15 June	15%
15 September	45%
15 December	75%
15 March	100%

Interest if an instalment is missed

A missed instalment draws interest at 1% a month. Section 234B covers a shortfall. Section 234C covers deferment. Work out the dates before the cash leaves the business. The advance tax calculator uses the same schedule.

When you leave 44AD

You stop using 44AD if any one of these is true:

Over the cap

Turnover above ₹2 crore, or above ₹3 crore on the 5% cash rule

An earlier audit

Section 44AB required an audit in any earlier year

Profit under 6% or 8%

You want to declare less than the deemed profit

After you leave:

If an audit was triggered, you cannot opt back into 44AD for the next 5 years
Keep full books of account
File ITR-3 instead of ITR-4
Pay advance tax on the quarterly dates

ITR-4 or ITR-3

While you qualify, you file ITR-4 (Sugam). The ₹50 lakh on that form is total income. The ₹2 crore and ₹3 crore figures above are turnover. They are different tests. Form downloads are on the income-tax return forms page. Filing steps are in the ITR guide.

Feature	ITR-4 (Sugam)	ITR-3
Who can use it	44AD, 44ADA, or 44AE	Anyone with business or professional income
Total income	₹50 lakh or less	No limit on this form
Books of account	Not required	Required
Form length	Short	Long
Filing date	31 July 2027	31 October 2027 if an audit applies

Deemed profit at or under ₹12 lakh

If the 6% or 8% profit is ₹12 lakh or less under the new regime, Section 87A can bring the tax to ₹0. At ₹1.5 lakh to ₹2 lakh of digital turnover a month, a year of receipts is ₹18 lakh to ₹24 lakh, and 6% of that is ₹1.08 lakh to ₹1.44 lakh. Both sit under ₹12 lakh. Confirm the rebate on the resident benefits table for the year you file.

How 44AD works

Turnover limits

Advance tax by 15 March

When you leave 44AD

ITR-4 or ITR-3

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