Published on Jul 10, 2025
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Presumptive Taxation – Sections 44AD, 44ADA, 44AE
Presumptive Taxation Overview
Presumptive taxation simplifies compliance for small taxpayers. Instead of maintaining detailed books, income is declared as a fixed percentage of turnover or receipts.
Section 44AD – Businesses
- Applicable to: Individuals, HUFs, Partnership Firms (not LLPs).
- Turnover up to ₹2 crore (₹3 crore if 95% digital receipts).
- Profit presumed at 6% (digital) or 8% (cash).
- No detailed books required unless lower profit is declared.
Section 44ADA – Professionals
- Applies to professionals like doctors, lawyers, architects, accountants, IT consultants.
- Receipts up to ₹50 lakh (₹75 lakh if 95% digital).
- 50% of receipts presumed as income.
Section 44AE – Transporters
- For owning ≤10 vehicles.
- Income calculated per vehicle, per month (₹7,500 or more depending on type).
Key Takeaway
Presumptive schemes reduce compliance but if income declared is less than prescribed %, books & audit become mandatory.