PRESUMPTIVE TAX SECTION 44ADA

Section 44ADA for professionals

If your work is on the notified list, Section 44ADA treats 50% of gross receipts as profit. You do not attach proofs for the other half. The rupee caps below are for fees in FY 2026-27. That 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 44ADA: 50% of gross receipts, up to ₹50 lakh, or ₹75 lakh if cash receipts are not more than 5%. Section 44AD: 8% of turnover or gross receipts, or 6% when the amount comes by account-payee cheque, account-payee bank draft, or electronic mode, up to ₹2 crore, or ₹3 crore on the same 5% cash test. A cheque or draft that is not account-payee counts as cash on that page.
Income-tax return forms, including ITR-4 and ITR-3

How 44ADA works

You pay tax on half of what clients paid you. The other half is treated as the cost of the work: office, internet, software, travel, equipment, and the rest. You do not file bills for that half while you stay inside the section.

Gross receipts

₹18L

What clients paid you

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Taxable (50%)

₹9L

What you pay tax on

The receipt cap has two levels:

→ Usual cap: gross receipts of ₹50 lakh or less
→ Higher cap: ₹75 lakh or less, if cash receipts are 5% or less of the total

Cash and the ₹75 lakh cap

In 2026, almost all freelancer payments are digital. If cash is under 5% of receipts, the ₹75 lakh cap applies. On the CBDT page, a cheque or bank draft that is not account-payee counts as cash. Account-payee cheque, account-payee draft, and electronic receipts do not.

44AD and 44ADA

The two sections cover different work. Using the wrong one can start an audit, or the department can refuse the presumptive figure.

Feature	44AD (business)	44ADA (profession)
Who qualifies	Any business (trading, services, and similar)	Notified professions only
Deemed profit	8% (cash) / 6% (digital)	50%
Threshold	₹2 crore / ₹3 crore (digital)	₹50 lakh / ₹75 lakh (digital)
Best for	Shopkeepers, traders, small businesses	Consultants, designers, developers, lawyers
Advance tax	One payment, by 15 March	One payment, by 15 March
ITR form	ITR-4 (Sugam)	ITR-4 (Sugam)

Which section matches the work

On the same receipts, 50% under 44ADA is a larger taxable profit than 8% or 6% under 44AD. A notified profession uses 44ADA. Shopkeepers, traders, and other small businesses use 44AD.

Who is on the list

44ADA applies only to professions CBDT has put on the list. If the work is not on it, the section does not apply.

Profession	Qualifies?
Legal (advocate, legal consultant)	Yes
Medical (doctor, dentist, physiotherapist)	Yes
Engineering / architectural	Yes
Accountancy (CA, CMA, CS)	Yes
Technical consultancy	Yes
Interior decoration	Yes
IT professionals (specific notification)	Yes
Content creator / influencer	May not qualify
Freelancer with no notified profession	No. Use 44AD

If the work is not clearly on the list

Use 44AD, the business presumptive section. A 44ADA claim that does not fit can mean an audit and a penalty. 44AD is available for any business activity. The 44ADA list is the section 44AA(1) professions, plus the ones CBDT has notified: film artists, authorised representatives, company secretaries, and IT professionals.

When 44ADA stops

Three things take you off 44ADA. If any one of them applies, switch to ITR-3 and keep regular books.

Over the cap

Gross receipts above ₹50 lakh, or above ₹75 lakh on the digital rule

Profit under 50%

You declare less than 50% as profit. The presumption does not apply at all.

Paid like salary

Payment from a single client is structured as salary, and it is treated as employment

When any of these happen:

Stop using 44ADA immediately
Keep full books of account from the start of the year
Get a tax audit from a chartered accountant under Section 44AB if turnover is over the threshold
File ITR-3 instead of ITR-4

ITR-4 or ITR-3

The form follows whether you stay on presumptive taxation. The ₹50 lakh on ITR-4 is total income. The ₹50 lakh and ₹75 lakh under 44ADA are gross receipts. They are different tests.

ITR-4 (Sugam)

→ You use 44AD, 44ADA, or 44AE
→ Total income is ₹50 lakh or less
→ Books of account are not required
→ Short form
→ Due: 31 July 2027

ITR-3

→ You are not using presumptive taxation, or receipts are over the threshold
→ Any income level
→ Books of account are required
→ Long form
→ Due: 31 October 2027, if an audit is needed

Freelancer tax calculator

The calculator applies the 44ADA 50% figure and compares tax under both regimes.

Freelancer tax calculator

How 44ADA works

44AD and 44ADA

Who is on the list

When 44ADA stops

ITR-4 or ITR-3

Freelancer tax calculator

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