Presumptive taxation is a simplified scheme that lets eligible small businesses and professionals declare income at a prescribed percentage of turnover, skipping detailed books and, in most cases, a tax audit.
This guide explains Sections 44AD (business), 44ADA (professionals) and 44AE (transporters) — the rates, eligibility and turnover limits.
What is Presumptive Taxation under 44AD, 44ADA and 44AE?
Under 44AD, eligible businesses declare 8% of turnover as income (6% for digital receipts). Under 44ADA, specified professionals declare 50% of gross receipts. Under 44AE, transporters declare a fixed amount per vehicle per month.
These schemes reduce compliance for small taxpayers, but come with turnover caps and lock-in conditions.
| 44AD — business | 8% of turnover (6% for digital), turnover up to ₹2–3 crore |
|---|---|
| 44ADA — professionals | 50% of gross receipts, up to ₹50–75 lakh |
| 44AE — transport | Fixed sum per goods vehicle per month |
| Books/audit | Generally not required if opted correctly |
Frequently asked questions
Who can use Section 44ADA?
Specified professionals — such as doctors, lawyers, architects, engineers, accountants and technical consultants — with gross receipts within the limit.
Is there a lock-in under 44AD?
Yes. If you opt out of 44AD after opting in, you cannot claim it again for five years and may need a tax audit.