If you're a freelancer, professional or small business owner, maintaining detailed books and getting audited can feel like overkill. India's presumptive taxation scheme is built exactly for you — you declare income at a fixed percentage of turnover and skip the heavy compliance.
Section 44AD — for small businesses
Eligible resident businesses can declare a fixed percentage of turnover as income — 8% for cash receipts and 6% for digital/bank receipts — without maintaining detailed books or a tax audit, up to a turnover limit (higher where most receipts are digital).
Section 44ADA — for professionals
Specified professionals (like consultants, designers, doctors, lawyers, architects) can declare 50% of gross receipts as income under 44ADA, up to the prescribed limit. The rest is treated as your expenses — no bills to preserve, no audit.
Why it's popular
- Far less paperwork — no detailed profit & loss or balance sheet needed.
- No tax audit within the limits.
- Predictable, simple tax calculation.
The catch to know
If you opt out of the scheme after using it, there can be a lock-in before you can use it again, and you may then need audited books. Also, if your actual profit is genuinely lower than the presumptive rate, regular books might save you tax — so it's worth a quick comparison before choosing.
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This article is for general information based on rules current at the time of writing and is not professional advice. Rules change — confirm specifics with a GovYapar expert before acting.
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