Section 44ADA presumptive taxation for professionals
The 50% scheme for the specified professions, and how it differs from 44AD
Section 44ADA lets a specified professional declare 50% of gross receipts as income, with no detailed books or audit within the limits, up to Rs 75 lakh of receipts where cash is 5% or less (otherwise Rs 50 lakh). It applies only to the professions notified under Section 44AA(1): legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, company secretary, authorised representative, film artist and information technology. Crucially, unlike Section 44AD, there is no five-year lock-out, so a professional can opt in and out year to year.
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Who qualifies (and who does not)
Only the specified professions under Section 44AA(1) qualify: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, company secretary, authorised representative, film artist and information technology. A business does not qualify, it uses Section 44AD at 6 or 8%. The most misused entry is technical consultancy, which means scientific or technological expertise (a scientist or technocrat), not general business, management or marketing consultancy.
warningIf you are not in the Section 44AA(1) list, you are a business and use 44AD, not 44ADA. A client deducting 194J TDS does not make you a specified professional.
How it works
You declare 50% of your gross professional receipts as income and pay tax on that, with no detailed books or audit within the limits. The other 50% is treated as covering your expenses. If your actual expenses are higher than 50% of receipts, you can instead keep proper books and declare your actual (lower) profit, 44ADA is optional simplification, not a compulsory floor. Advance tax for a professional on 44ADA is a single instalment by 15 March.
- Be a specified professional under Section 44AA(1)
- Gross receipts within Rs 75 lakh (cash <=5%) or Rs 50 lakh
- Declare at least 50% of receipts as income, or keep books for a lower actual profit
- Pay advance tax in a single 15 March instalment
How 44ADA differs from 44AD
Three differences matter. The rate: 50% (44ADA) versus 6 or 8% (44AD). The eligibility: specified professions only (44ADA) versus businesses (44AD). And the lock-out: 44AD has a five-year lock-out under 44AD(4) if you opt out, but 44ADA has no such lock, so a professional can move in and out freely each year. This last point is useful, a professional with a high-expense year can keep books that year and return to 44ADA the next.
tipBecause 44ADA has no lock-out, a professional can use it in normal years and switch to actual-books in a high-expense or loss year, then return, without penalty. A 44AD business cannot.
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Source / notes
- Income-tax Act 1961 s.44ADA (consolidated into Income-tax Act 2025 s.58)
- Income-tax Act 1961 s.44AA(1) (specified professions)
Frequently asked questions
Who can use Section 44ADA?+
Only the specified professions under Section 44AA(1): legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, company secretary, authorised representative, film artist and information technology. A business is not eligible, it uses Section 44AD at 6 or 8%. Most trades, coaches and general consultants are businesses, not specified professions.
Is there a lock-out like 44AD?+
No, and this is a key difference. Section 44AD has a five-year lock-out under 44AD(4) if you opt out, but 44ADA has no such lock. A professional can use 44ADA in some years and keep proper books in others (for example a high-expense or loss year) and return to 44ADA, without penalty.
Do I have to declare 50% if my expenses are higher?+
No. The 50% rate assumes the other half covers expenses. If your actual expenses exceed 50% of receipts, you can keep proper books and declare your actual, lower profit instead (subject to audit requirements). 44ADA is optional simplification, not a minimum you are forced to pay.
What is technical consultancy for 44ADA?+
It means scientific or technological expertise, the work of a scientist or technocrat, not general business, management or marketing consultancy. A non-technical consultant is a business and uses Section 44AD, not 44ADA. Labelling ordinary consultancy as technical consultancy to access the professional scheme carries real risk.
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