Section 44ADA Presumptive Tax Checker for Founder-Professionals
Check if you qualify for Section 44ADA presumptive taxation — declare 50% of gross receipts as profit, skip books of accounts, and simplify your tax return.
Actual books is lower.High expenses mean declaring 50% under 44ADA is less beneficial. You can still opt for 44ADA to avoid audit — but you'll pay slightly more tax. Consider maintaining books if expenses significantly exceed 50% of receipts.
Section 44ADA, Income Tax Act 1961. New tax regime slabs used (FY 2024-25). Rebate u/s 87A for income ≤ ₹7 lakh. Surcharge not included — applies at higher income levels. Consult your CA before filing.
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Frequently asked questions
What is Section 44ADA presumptive taxation?
Section 44ADA allows specified professionals to declare 50% of their gross receipts as their net income, without maintaining detailed books of accounts or getting a tax audit. It is available to resident individuals and partnership firms engaged in specified professions with gross receipts not exceeding ₹75 lakh in a financial year (as amended for FY 2023-24 onwards, subject to cash conditions).
Which professions are eligible for Section 44ADA?
Eligible professions under Section 44ADA: legal (advocates), medical (doctors, surgeons), engineering, architectural, accountancy (CAs, CMAs, CSs), technical consultancy, interior decoration, film artists (directors, cinematographers, actors, etc.), company secretaries, and authorised representatives. IT consultants and management consultants do not qualify unless their work falls within "technical consultancy".
What is the income limit for Section 44ADA in FY 2024-25?
Gross receipts must not exceed ₹75 lakh in a financial year. The enhanced ₹75 lakh limit (vs the earlier ₹50 lakh) applies from FY 2023-24 onwards, provided that the amount received in cash during the year does not exceed 5% of total gross receipts. If cash receipts exceed 5%, the limit remains ₹50 lakh.
Do I need to maintain books of accounts under Section 44ADA?
No. The entire premise of 44ADA is that you do not need to maintain books of accounts. You cannot claim deductions for actual expenses (other than Chapter VIA deductions like 80C, 80D, etc.). If you declare less than 50% of receipts as income, you must get a tax audit under Section 44AB.
Can a founder who also draws a salary use Section 44ADA for consulting income?
Yes. If a founder draws a salary from their company and also earns professional fees (consulting income from another entity or personal clients), the consulting income can be reported under 44ADA if it meets the profession and threshold criteria. The salary income is reported separately under the head "Salaries." The combined income is taxed at applicable slab rates.