section 44ADA of income tax act

Section 44ADA – Presumptive Taxation for Professionals

Section 44ADA of the Income-tax Act, 1961 provides a presumptive taxation scheme for certain resident professionals, under which taxable professional income is generally presumed to be 50% of gross professional receipts.

1. Who can opt for Section 44ADA?

It applies to:

• Individual resident in India
• Partnership firm resident in India, other than an LLP
• The assessee must be engaged in a profession specified under Section 44AA(1).

Specified professions include, among others:

• Legal profession
• Medical profession
• Engineering
• Architecture
• Accountancy
• Technical consultancy
• Interior decoration
• Other professions notified by the CBDT.

2. Gross receipt limit

For the current provisions:

ConditionMaximum gross receiptsNormal condition₹50 lakhCash receipts do not exceed 5% of total gross receipts₹75 lakh

The ₹75 lakh limit applies where the aggregate amount received in cash during the previous year does not exceed 5% of total gross receipts.

3. Presumptive income

Under Section 44ADA, 50% of the gross professional receipts is deemed to be professional income.

For example:

Professional receipts = ₹40,00,000

Presumptive income:

₹40,00,000 × 50% = ₹20,00,000

The assessee can also declare income higher than 50% if the actual income is higher.

4. Expenses

Once 50% is declared as professional income under 44ADA, separate deductions for expenses under Sections 30 to 38 are generally not available because they are deemed to have already been allowed.

Therefore, for example:

Gross professional receipts ₹40 lakh
Less: presumed expenses ₹20 lakh
Taxable professional profit ₹20 lakh

You cannot again claim office rent, salary, depreciation, telephone, travelling, etc. as separate deductions from the ₹20 lakh presumptive income.

5. Books of account and audit

One of the principal benefits of presumptive taxation is reduction in normal bookkeeping/audit compliance. However, the consequences can change if the assessee declares income below the prescribed presumptive percentage or does not satisfy the conditions of 44ADA.

6. ITR

For AY 2026-27, eligible taxpayers using presumptive professional income under 44ADA may use ITR-4 (Sugam) subject to the other conditions for ITR-4; ITR-4 is optional, not mandatory.

Important distinction: 44AD vs 44ADA

ParticularSection 44ADSection 44ADANatureBusinessSpecified professionBasic presumptive rate6%/8% depending on receipt mode50%Normal limit₹2 crore₹50 lakhEnhanced limit subject to ≤5% cash receipts₹3 crore₹75 lakhExampleTrading/businessDoctor, lawyer, CA, engineer, consultant

The Income Tax Department specifically distinguishes 44AD as the presumptive scheme for eligible businesses and 44ADA for specified professions.