Presumptive tax calculator — sections 44AD and 44ADA
Presumptive taxation lets a small business or professional declare a fixed percentage of receipts as income, with no books and no audit. This works out what you would declare, and whether you are inside the limits.
Your figures
The split between cash and banking-channel receipts changes both your income and your eligibility, so it is asked for separately.
8% on cash, 6% on digital — and most people never split the figure
Section 44AD presumes 8% of turnover as your income, but only 6% on receipts that arrive through banking channels. On a ₹50,00,000 turnover that is the difference between declaring ₹4,00,000 and ₹3,00,000 — and between roughly ₹0 and ₹0 of tax.
A business that takes most payments by UPI is entitled to the lower rate and routinely does not claim it, because nobody ever asked for the split. We ask for it on every ITR-4 we file.
The turnover limits, and what unlocks the higher one
| Scheme | Basic limit | Higher limit | Rate |
|---|---|---|---|
| Section 44AD — business | ₹2,00,00,000 | ₹3,00,00,000 | 8% cash / 6% digital |
| Section 44ADA — profession | ₹50,00,000 | ₹75,00,000 | 50% of gross receipts |
The higher limit is available only where cash receipts stay within 5% of turnover. Take one large payment in cash and you can fall back to the lower limit for the whole year — which is a reason to think about it in April rather than in July.
Who cannot use section 44AD
- Commission agents and brokers
- Agency businesses
- Professionals covered by section 44AA(1)
- Limited liability partnerships
- Non-residents
The commission-agent exclusion catches more people than any other. If your income is commission or brokerage, 44AD is closed to you regardless of turnover, and a return filed on that basis is wrong.
Which professions qualify for 44ADA
- Legal
- Medical
- Engineering
- Architecture
- Accountancy
- Technical consultancy
- Interior decoration
- Other professions notified by the CBDT
Section 44AD has a five-year lock-in
Once you declare under 44AD, opting out in a later year locks you out of the scheme for the following 5 years — and in those years you must keep books and face an audit if income exceeds the exemption limit. The scheme is easy to enter and expensive to leave. If your margins are genuinely below 8%, or your business is heading that way, declaring real profit from the start is often the better decision.
ITR-4 filing is ₹499, including GST
Presumptive computation, turnover reconciled against your GST returns, and the cash-versus-digital split done properly.
- Section 44AD — ₹2,00,00,000 basic and ₹3,00,00,000 enhanced turnover limits, 8% and 6% rates, five-year lock-in and the exclusion list. Verified 1 September 2026.
- Section 44ADA — ₹50,00,000 basic and ₹75,00,000 enhanced limits at 50% of gross receipts. Verified 1 September 2026.
- Both carried into the Income-tax Act, 2025 in substance; section numbers have changed and we cite the familiar ones because that is what people search for.