The presumptive taxation scheme lets eligible professionals declare 50% of their gross receipts as income, without keeping detailed books of accounts or getting an audit. For many freelance developers, designers and consultants, it's the simplest and cheapest way to file.
Who can use the scheme?
Resident individuals and partnership firms (not LLPs) in specified professions, which include legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, and notified professions such as information technology, company secretaries and film artists. Software development, design and technical consulting are usually accepted, but confirm your case with a chartered accountant.
The Income-tax Act, 2025 renumbered many sections from April 2026, but the presumptive scheme for professionals continues. It's still widely known as Section 44ADA.
Limits and how the tax is worked out
| Rule | FY 2026-27 |
|---|---|
| Deemed profit | 50% of gross receipts (you can declare more) |
| Receipts limit | ₹50 lakh |
| Higher limit | ₹75 lakh, if cash receipts are 5% or less of the total |
| Books of accounts and audit | Not needed |
| Return form | Usually ITR-4 |
| Advance tax | One instalment by 15 March |
Taxable income = 50% of gross receipts + other income − deductions (old regime only)Tax = slab tax on taxable income − rebate + surcharge, then + 4% cessThere's no standard deduction for professional income; that's only for salary. Your real expenses don't matter either: the 50% is assumed to cover them.
Worked examples
Example: Receipts of ₹30 lakh, new regime
Deemed income = 50% × ₹30,00,000 = ₹15,00,000.
Tax = ₹1,05,000 + ₹4,200 cess = ₹1,09,200, only about 3.6% of what you billed.
Example: Receipts of ₹60 lakh, almost all by bank transfer
Cash is under 5%, so the ₹75 lakh limit applies.
Deemed income = ₹30,00,000; tax with cess = ₹4,99,200, about 8.3% of receipts.
Compare that with a salary of the same size: an employee earning ₹30 lakh pays far more tax, which is one reason contracting is popular in tech.
Things to watch
- If you declare less than 50% as profit and your income is above the basic exemption limit, you must keep books and get an audit.
- Pay advance tax by 15 March if your tax for the year is ₹10,000 or more, or you'll pay interest.
- GST is separate. Registration is needed above ₹20 lakh of receipts in most states, but exports of services can be zero-rated. See the GST calculator.
- Freelancers with professional income can switch from the new regime to the old only once in a lifetime, so choose carefully.
How to use this calculator
- Enter your total receipts for the year.
- Tick the box if cash is 5% or less of receipts.
- Add other income and choose your regime.
FAQs
Who can use the presumptive scheme?
Resident individuals in specified professions, which usually includes software developers, designers and technical consultants. Confirm your case with a chartered accountant.
Has the section number changed?
The Income-tax Act, 2025 renumbers many sections from April 2026, but the presumptive scheme for professionals continues. People still search for it as Section 44ADA.
Do I need to pay advance tax?
Yes, if your tax is ₹10,000 or more. Under the presumptive scheme it can be paid in one instalment by 15 March.
Sources
- Business Today: tax slabs for FY 2026-27 after Budget 2026
- Income Tax Department: tax rates and surcharge
- ClearTax: Income-tax Rules 2026 and HRA cities
- ClearTax: Section 44ADA presumptive tax
- ThePrint (PTI): EPF rate of 8.25% for 2025-26 ratified
Results are estimates for resident individuals under 60 and aren't tax, legal or financial advice. For your own return, check with a chartered accountant. Spotted a mistake? Tell us.