India Presumptive Taxation Calculator (44AD/44ADA)

Sections 44AD and 44ADA let small businesses and specified professionals skip maintaining detailed books of account and instead declare a flat, deemed percentage of turnover as taxable income — 6-8% for eligible businesses under Section 44AD, or a flat 50% for specified professionals (lawyers, doctors, engineers, architects, accountants, and a few CBDT-notified others) under Section 44ADA. The trade-off: once you opt in, you cannot separately claim any business expense deduction — the deemed percentage is treated as already net of all expenses — and if your real profit margin is thinner than the deemed rate, the actual-books route can leave you paying less tax.

This calculator checks your eligibility against the correct turnover/receipts threshold for FY2025-26 (including the enhanced threshold available when cash receipts stay at or below 5% of the total), computes your deemed presumptive income, and directly compares the resulting tax liability against what you would owe on your actual books-based profit — so you can see which route genuinely costs less.

Section 44AD (eligible businesses):

$$\text{Deemed Income} = 6\% \times \text{Digital/Banking Receipts} + 8\% \times \text{Cash Receipts}$$

Eligibility threshold: ₹2 crore turnover, enhanced to ₹3 crore if cash receipts do not exceed 5% of total turnover. Eligible taxpayers: resident individuals, HUFs, and partnership firms (excluding LLPs) — professionals and commission/brokerage-based businesses are excluded from 44AD entirely.

Section 44ADA (specified professionals):

$$\text{Deemed Income} = 50\% \times \text{Gross Receipts}$$

Eligibility threshold: ₹50 lakh, enhanced to ₹75 lakh under the same 5%-cash-receipts condition. Eligible taxpayers: resident individuals and resident partnership firms (excluding LLPs) only — HUFs are not eligible for 44ADA, a distinction from 44AD.

Tax comparison: the calculator computes total tax liability (via this platform's verified FY2025-26 tax engine) on the deemed presumptive income versus on your entered actual-books profit, both stacked with any other taxable income you enter, and reports which route produces the lower tax bill.

Using the calculator's default inputs (Section 44AD business):

• Total Turnover: ₹15,00,000 (₹12,00,000 via digital modes + ₹3,00,000 cash)
• Actual Profit as Per Books: ₹14,00,000
• Regime: New, below 60

Step by step:

1. Cash fraction: ₹3,00,000 ÷ ₹15,00,000 = 20% (above 5%), so the base ₹2 crore threshold applies. Turnover (₹15,00,000) is comfortably within it — eligible.
2. Deemed income: (₹12,00,000 × 6%) + (₹3,00,000 × 8%) = ₹72,000 + ₹24,000 = ₹96,000.
3. Tax on ₹96,000 (new regime): falls entirely within the 0% bracket (≤₹4,00,000) → ₹0 tax.
4. Tax on the actual ₹14,00,000 profit: 0% to ₹4L, 5% to ₹8L (₹20,000), 10% to ₹12L (₹40,000), 15% on the remaining ₹2L (₹30,000) = ₹90,000; no rebate (income exceeds the ₹12L threshold by more than the tax); cess 4% → ₹93,600.
5. The presumptive scheme wins by ₹93,600 — a striking result showing how, for a business with genuinely thin margins relative to the 6-8% deemed rate, the flat presumptive figure can dramatically undercut actual taxable profit.

• The 5-assessment-year lock-out (Section 44AD(4)/(5)). If you use 44AD one year and then report profit not in accordance with it in any of the next 5 assessment years, you lose eligibility to use 44AD for 5 years afterward, and must maintain full books and get them audited if your income exceeds the basic exemption limit during that period. This calculator does not track multi-year history.
• GST or other indirect tax implications of your turnover figures, which are entirely separate from this income-tax computation.
• Partial-year eligibility or a mid-year switch between the presumptive scheme and actual-books taxation.
• The single-installment advance tax rule for 44AD/44ADA taxpayers, who must pay 100% of their advance tax liability by 15 March in one installment rather than the standard four-date schedule — see the Advance Tax Calculator for the standard schedule that does not apply to presumptive-scheme taxpayers.
• Depreciation and other book adjustments that would normally reduce actual taxable profit under the regular (non-presumptive) computation — this calculator takes your "actual profit as per books" figure as already final.

• Assuming the presumptive scheme is always the cheaper option. It genuinely depends on your real profit margin relative to the deemed 6-8% (44AD) or 50% (44ADA) rate — a high-margin consultant with expenses well below 50% of receipts, for example, might pay less tax on actual profit than under 44ADA's flat 50% assumption.
• Missing the enhanced threshold's exact condition. The higher ₹3 crore (44AD) or ₹75 lakh (44ADA) threshold applies only if cash receipts stay at or below 5% of total turnover/receipts — a business at 6% cash falls back to the lower base threshold entirely, not a prorated one.
• Believing HUFs qualify for 44ADA. They do not — 44ADA eligibility (post Finance Act 2021) is limited to resident individuals and resident partnership firms other than LLPs; HUFs remain eligible for 44AD (if it's a business, not a specified profession) but not 44ADA.
• Opting out casually without understanding the 5-year lock-out. Declaring a lower profit than the deemed percentage in a later year (without maintaining books to justify it) triggers a genuine 5-assessment-year loss of eligibility, not just a one-year exception.
• Forgetting that presumptive income is deemed net of ALL expenses. You cannot separately deduct depreciation, salaries, rent, or any other business expense on top of the deemed percentage — if your actual expenses are unusually high, the presumptive scheme may overstate your real tax base.

• Section 44AD, Income-tax Act, 1961, including the Finance Act 2023 enhanced-threshold amendment (effective AY2024-25).
• Section 44ADA, Income-tax Act, 1961, including the Finance Act 2021 eligibility restriction (excluding HUFs) and the Finance Act 2023 enhanced-threshold amendment.
• Section 44AA(1), Income-tax Act, 1961 (list of specified professions eligible for Section 44ADA).