The Presumptive Income Tax Scheme for Professionals under Section 44ADA of Income Tax Act, 1961 (Replaced by Sections 58(2) and 62(1)(a) of the new Income Tax Act, 2025 which is to come into effect from 01.04.2026) is designed to simplify tax calculations for professionals. It allows eligible taxpayers to declare a fixed percentage of their gross receipts as income, reducing the need for extensive bookkeeping and audit. This scheme benefits professionals like doctors, lawyers, architects, and consultants, making tax compliance more straightforward. Understanding the eligibility, applicable rates, and conditions under these sections can help professionals manage their tax obligations efficiently while staying compliant with tax laws.
Gross Receipt Limits
The presumptive gross receipt limits for professionals is Rs 50 (Rs 75 Lakhs, Where the total cash received is not more than 5% of the total turnover or gross receipts). Meaning that, a professional can file his/her Income Tax Return and Income Tax under presumptive Income Tax Scheme if his gross receipt in a financial year doesn’t exceed Rs 50 Lakhs or Rs 75 Lakhs (as the case may be)
Specified Professionals
The following professionals are specified as professionals for the purpose of presumptive tax scheme by Section 62(4) of Income Tax Act, 2025 who are eligible to file tax under presumptive income tax scheme:
- Legal
- Medical
- Engineering
- Architectural
- Accountancy
- Technical Consultancy
- Interior Decoration
- Information Technology
- Company Secretary
Meaning thereby, Doctors, Advocates, Engineers, Chartered Accountants, Architects, Interior Decorators, Information Technology Professionals are all eligible to file their Income Tax under Presumptive Taxation. Also, the board (government), may also notify other professions from time to time as well.
Benefits of filing income tax return under Section 44ADA
Following are the benefits, if a professional opts for filing his/her income tax return under section 44ADA i.e ITR 4:
- Saving the professional from maintaining and keeping the books of accounts related to receipts, expenditures and other financial transactions related to professional financial transactions.
- Filing Income Tax Return under Section 44ADA is comparatively easy where the professional himself/herself can file his/her file income tax return in form ITR 4 by simply showing his/her gross receipts (not more than 75 Lakhs) and 50%/actual profit (as the case may be) thereof.
- Saving the cost of hiring a Chartered Accountant : By opting for filing return under Section 44ADA, the professional saves on the cost of hiring a Chartered Accountant, who otherwise required to be hired for books of accounts and audits (as the case may be)
Calculation of Income under Presumptive Scheme for Professionals
The Income under presumptive Scheme for professionals is taken as 50% of the gross receipts or actual profit, whichever is higher.
Meaning thereby, a professional may declare 50% of his gross receipts as Income under presumptive taxation and avoid maintaining books of accounts and getting his/her books of audited by an accountant. In such case, it is deemed that all the expenses of the business are adjusted in the 50% and no other expense is allowed, deeming 50% of the gross receipts as the profit thereby.
It is to be noted that if the actual profit is more than 50% of the gross receipt then actual profit is to be declared as the profit under Income Tax.
Calculation of Tax Liability
Once the Income has been calculated by taking either 50% or the actual profit as the case may be, the said Income is added to the gross total income of the professional and income tax payable is calculated as per the applicable slab rates.
Examples & Caluculations
Profit is less than 50% of Gross Receipts : Example of Dr Seema
Doctor Seema, a 32 year old gynaecologist Doctor by profession provides her services through her own clinic. In the financial year 2024-25 (to be known as tax year in the new Income Tax Law), she earns a total of Rs 75 Lakhs in gross receipts.
The entire Rs 75 Lakhs were paid to her directly in her bank account and there is no component of cash receipt and she made a profit of Rs 30 Lakhs as follows:
| Particulars | INR (Rupee) | Remarks | |
| Gross Receipts | 7500000 | All in her bank account | |
| Less | Clinic Rent | -1200000 | Rs 1,00,000 per month |
| Less | Staff Salary | -2400000 | Towards, junior doctors, nursing staff etc |
| Less | Clinics Electricity Bill | -180000 | Approx Rs 15000/month |
| Less | Medical usable | -720000 | Medical kits, and usable |
| Profit | 3000000 |
Now, since her profit is upto 50% of her gross receipts thereby she can declare 50% of her total gross receipts i.e 37,50,000 (50% of 75 Lakhs) as her profit under presumptive taxation instead of actual profit i.e Rs 30 Lakhs.
Now the question arises as to why would she declare higher profit then the actual profit she earned ?
Presumptive Income Tax Scheme for professionals is designed to facilitate the professionals in easy compliances, now if Doctor Seema, will declare Rs 37,50,000 then in such case, she is not required to prepare books of accounts and get her accounts audited by an accountant. She can simply file her ITR 4, declaring her Income under Section 44ADA of Income Tax, 1961 for the Financial Year 2024-25 (Section 58(2) and 62(1)(a) of Income Tax Act, 2025 with effect from 01.04.2026) and be done with it. The Income tax department will not ask her for books of accounts, audits, and financial statements.
Amount of Income Tax that She will have to pay if she declares profit under Presumptive Taxation
Considering she doesnt have any other Income other than the professional Income as a Doctor, and no deductions are to be claimed then If she declares profit under presumptive tax scheme i.e Rs 37,50,000 instead of actual profit i.e Rs 30,00,000 then the Income Tax Liability in this case will be Rs 8,58,000 including health and education cess.
Income Tax if she declares the actual profits fulfilling the conditions of maintaining books of accounts & auditing
If Doctor Seema, instead of declaring her profit under presumptive tax scheme, decides to maintain the books of accounts and get her accounts audited and declare actual profit i.e Rs 30,00,000 then the total tax payable by her will be Rs 6,24,000 which will save her an Income Tax of Rs 2,34,000.
What should Doctor Seema Do ?
Doctor Seema should declare actual profits only instead of going for presumptive tax scheme under Section 44ADA of Income Tax Act as there is a huge savings of tax amounting to Rs 2,34,000. In order to do that, she is required to maintain her books of accounts and get the same audited by a Practicing Chartered Accountant. The cost of maintaining books and professional fee of Chartered Accountant will be way lesser then Rs 2,34,000 in the given case.
Profit is more than or equal to 50% of Gross Receipts : Example of Advocate Rahul
Advocate Rahul, a 42 year old criminal Advocate practicing in Delhi High Court had a total gross receipt amounting to Rs 50 Lakhs in the Financial Year 2024-25.
Out of Rs 50 Lakhs, he received Rs 35 Lakhs in cash and Rs 15 Lakhs directly in his bank account and he made a total profit of Rs 40 Lakhs as follows:
| Particulars | INR (Rupee) | Remarks | |
| Gross Receipts | 50,00,000 | Partly cash and Partly in Bank | |
| Less | Office Rent | -240000 | Rs 20,000 per month |
| Less | Staff Salary | -460000 | Towards a junior advocate and office boy |
| Less | Office Electricity Bill | -60000 | Approx Rs 5000/month |
| Less | Travelling | -240000 | Miscellaneous |
| Profit | 4000000 |
Now, since her actual profit is Rs 40 Lakhs which is more than 50% of gross receipts (Rs 25 Lakhs i.e 50% of Rs 50Lakhs), thereby as per the presumptive tax scheme, Advocate Rahul cant declare 50% of his gross receipts and has to declare the actual profit as taxable income under income tax act i.e Advocate Rahul will have to declare Rs 40 Lakhs as his Income on compulsory basis as his Income from profession.
Now he also has both the options that he can either declare his Income under Section 44ADA i.e presumptive tax scheme or under normal provisions as well.
Should Advocate Rahul opt for Presumptive Tax Scheme for his professional Income ?
The answer is yes. Tax liability of Advocate Rahul will be same under both the scheme’s i.e both under Presumptive Scheme as well as Normal Scheme as the profit to be declared as Income chargeable to tax remains same in both the Scheme i.e Rs 40 Lakhs but if opts for presumptive scheme then he will not be required to maintain the books of accounts which will save him accounting cost and burden of keeping the books of accounts maintained with respect to his professional Income, Expenses and balance sheet items.
What if the actual profit of Advocate Rahul is equals to 50% of his Gross Receipts ?
In case where Advocate Rahul or any other professionals actual profit is equal to the 50% of his/her gross profit then they should opt for the presumptive tax scheme only since the amount of profit to be declared and tax liability remains same but at the same time opting for presumptive taxation scheme will help the professional save the burden of maintaining the books of accounts.
Gross Receipts more than Rs 75 Lakhs in a Financial Year
If the gross receipt of a professional in a financial year is more than Rs 75 Lakhs then in such case, such professional do not have an option to opt for the presumptive tax scheme and he is to declare profits under normal scheme. Meaning thereby, in such case he is required to maintain proper books of accounts.
Related Resources
- Frequently Asked Questions on Presumptive Taxation Scheme : Source : Income Tax Department