Tax for professional-services providers in India

The specified professions in India - lawyers, doctors, chartered accountants and company secretaries, engineers, architects, genuine technical consultants and a few others under Section 44AA(1) - do use Section 44ADA at 50% of gross receipts, up to Rs 75 lakh where cash is 5% or less. This is the genuine 44ADA case. If you are not in that list (most trades and general consultants are not), you belong in Section 44AD, not 44ADA.

Presumptive + GST + TDS at a glance

Presumptive taxation

Section:: Sec 44ADA
Deemed profit rate:: 50% of gross receipts
Classification:: profession

GST treatment

Slab:: 18%
SAC:: 998xxx (professional services, 18%); health-care by a clinical establishment is exempt
Composition eligible:: No
Reverse charge (RCM):: Not applicable

TDS exposure

Last reviewed: 29 May 2026

Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →

Unlike most trades, the specified professions in India do use Section 44ADA at 50% of gross receipts. These are the notified professions under Section 44AA(1): legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, company secretary, authorised representative, film artist and information technology. A genuine professional in this list declares 50% of receipts as income, up to Rs 75 lakh where cash is 5% or less (otherwise Rs 50 lakh). This page exists as the counterpoint: if you are not in this list, you belong in 44AD, not 44ADA.

What business structure do professional-services providers use?

The common patterns for professional-services providers are: Sole proprietor, the usual structure for an individual professional on 44ADA, Partnership or LLP, for a professional firm (note professional bodies may restrict structures), Private limited, where permitted for the profession. The right structure depends on revenue, liability exposure, and personal circumstances, covered below.

Who actually qualifies for Section 44ADA

Section 44ADA applies only to the professions specified under Section 44AA(1): legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, authorised representative, film artist, company secretary and information technology. A genuine professional in this list declares 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). The 50% deemed rate assumes the other 50% covers expenses; if your real expenses are much higher, you can keep books and declare actual profit instead.

Specified professionals under Section 44AA(1) declare 50% of gross receipts under Section 44ADA, up to Rs 75 lakh where cash is 5% or less. (Income-tax Act 1961 ss.44ADA/44AA(1) (consolidated into Income-tax Act 2025 s.58))

Technical consultancy is narrow

Technical consultancy is the most misused category. It means the work of a scientist or technocrat applying specialised technical knowledge, not general business consultancy, management advice, coaching or marketing. A management or business consultant who is not providing technical (scientific or technological) services is not a specified professional, and belongs in Section 44AD as a business, not 44ADA. Get this classification right, because wrongly claiming technical consultancy to access 44ADA, or wrongly being denied it, both carry risk.

Technical consultancy means scientific or technological expertise (a scientist or technocrat), not general business or management consultancy. (Income-tax Act 1961 s.44AA(1) (technical consultancy); ITAT interpretation (scientist/technocrat test))

GST, 194J and the healthcare exemption

Professional services are generally taxed at 18% GST with input credit, with registration once receipts cross Rs 20 lakh, and the composition scheme is not available to professionals. Clients deduct TDS under Section 194J at 10% on professional fees. One important carve-out: healthcare services provided by a clinical establishment or authorised medical practitioner are GST-exempt, so a doctor's clinical services are exempt while, say, a lawyer's or architect's services are taxable at 18%.

Professional services are GST 18% (composition not available); clients deduct 194J at 10%; healthcare by a clinical establishment is GST-exempt. (CGST Act 2017 (healthcare exemption notification); Income-tax Act 1961 s.194J)

Allowable expenses

Category	Examples	Tax treatment
Practice premises	Chamber or clinic rent, electricity, reception	Deductible if keeping books; subsumed in the 50% deemed profit under 44ADA
Staff	Associates, junior professionals, assistants	Deductible if keeping books; pay over Rs 10,000/day by bank (40A(3))
Professional costs	Bar/council fees, indemnity insurance, CPD, journals	Deductible business expense
Equipment and software	Computers, practice/clinic equipment, research databases	Deductible; in the 50% deemed profit under 44ADA
Admin	Phone, internet, accountant, GST filing	Deductible (apportion personal use)

Vehicle and travel costs

A professional making client or site visits can claim vehicle running costs under regular books, or rely on the 50% deemed profit under Section 44ADA which is treated as inclusive of such costs.

Capital allowances and equipment

On regular books, practice or clinic equipment and computers depreciate (computers generally 40% WDV, equipment 15%). Under Section 44ADA no separate depreciation is claimed, but keep invoices for the written-down value on any later sale.

Worked example

Advocate Priya — Delhi, DL

practising lawyer (sole practitioner) (2026-27)

Annual professional receipts Rs 40 lakh, almost all by bank transfer. Clients deduct 194J TDS at 10%. Her actual expenses are modest.

Law is a specified profession, so she uses Section 44ADA: deemed income 50% of Rs 40 lakh = Rs 20 lakh, with no detailed books, well within the Rs 75 lakh limit (cash under 5%). She files and reclaims the 194J TDS. Because her actual expenses are modest, the 50% deemed route is favourable; a professional with very high expenses might instead keep books and declare a lower actual profit. For GST she is registered and charges 18% on her legal services.

Common audit triggers for professional-services providers

Claiming 44ADA without being in the Section 44AA(1) specified-profession list
Labelling general business or management consultancy as technical consultancy to access 44ADA
Cash receipts over 5% of turnover while using the Rs 75 lakh 44ADA limit
Cash receipt of Rs 2 lakh or more from one client in a day (Section 269ST)
194J TDS in 26AS or AIS not reconciled with receipts declared
A doctor treating clinical income as taxable, or a non-doctor claiming the healthcare GST exemption

Frequently asked questions

Who can actually use Section 44ADA at 50%?+

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. If your work is not in this list, you are a business and use Section 44AD (6 or 8%), not 44ADA. Most trades, coaches and general consultants are not specified professions.

Is a management or business consultant a professional for 44ADA?+

Generally no. Technical consultancy under Section 44AA(1) 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. Labelling ordinary consultancy as technical consultancy to access 44ADA carries real risk.

My actual expenses are high. Do I have to use 44ADA at 50%?+

No. The 50% deemed rate assumes the other half covers your expenses. If your real expenses are much higher than 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 compulsory floor.

Are doctors' fees subject to GST?+

Healthcare services provided by a clinical establishment or an authorised medical practitioner are exempt from GST, so a doctor's clinical services are generally exempt. Other professionals, lawyers, architects, accountants and the like, are taxable at 18%. So the healthcare exemption is specific to medical clinical services, not professions generally.

Last reviewed: 29 May 2026