Section 44ADA
Section 44ADA was introduced for presumptive income for Freelancers & professionals. This section is similar to section 44AD for traders.
Under this section Freelancers or professionals such as legal, medical, engineering, architect, accountancy, technical consultancy, interior decoration or any of the profession as given in section 44AA are allowed to presume 50% of the gross receipts as net profit. This is applicable only to professional whose gross total receipts does not exceed Rs. 50 lakh rupees. This limit has been increased from FY 2023-24 (AY 2025-26) from Rs.50 Lakh to Rs.75 Lakh subject to the condition that at least 95% of the total receipts is through online modes.
For Example if a Professional’s Total Receipts are Rs.70 Lakh & out of which he received Rs.5 Lakh in cash & rest digitally. Then he can not opt for this scheme as his digital receipts are less than 95% of total receipts. Used strategically, Section 44ADA empowers freelancers to focus more on their craft and less on paperwork.
Who can opt for Section 44ADA
Three conditions must be fulfilled to become eligible for Section 44ADA
- The scheme is applicable to resident assessee who is an individual, Hindu Undivided Family (HUF) or partnership firm but not Limited Liability Partnership (LLP) and company.
- The profession must be covered under notified professions u/s 44AA (explained below)
- Gross Receipts from profession or freelancing activities does not exceed Rs. 50 lakh. This limit is extended to Rs.75 Lakh if at least 95% of the total receipts is through online modes (not in cash).
The assessee can opt in and out of scheme at any time. For example, a professional may file his return for AY 2024-25 under section 44ADA and opt out it for the AY 2025-26. There is no restrictions imposed in this regard .
A partner of a professional firm gets interest and salary from the firm under section 40b. Such partner can not opt for presumptive scheme under section 44ADA in respect of such salary and interest.
Also Read: GST on Freelancers/Professionals
Notified Professions u/s 44AA
Persons engaged in any of the following professions
- Legal
- Medical
- Engineering
- Architecture
- Accountancy
- Technical consultancy
- Interior decoration
- Authorized representatives
- Film Artists
- Certain sports related persons
- Company Secretaries and
- Information technology
Other professionals engaged in professions other than as specified profession i.e., IT professionals rendering routine services other than technical consultancy, providing tuitions (academic, dance or drawing) can consider opting for the Presumptive taxation scheme under Section 44AD subject to the threshold limit as prescribed under the Act.
Claiming Higher or Lower Profit
In case an eligible assessee carrying on the eligible profession, the profits and gains of such profession is deemed to be 50% of the gross receipts from such profession. However, the assessee can claim higher profits.
However, an assessee can claim profits to be lower than 50% by maintaining books of account as mentioned in section 44AA and gets them audited as per section 44AB.
If the total income of asseessee for the FY 2024-25 (AY 2025-26) (i.e 50% of gross receipts plus all other incomes) doesn’t exceed the maximum amount not chargeable to tax i.e. Rs. 3,00,000 under new Tax regime & Rs. 2,50000 , Rs. 300,000 (Senior Citizen) or Rs.5,00,000 (Super Senior Citizen) under old Tax regime, then he is not required to maintain accounts and get them audited.
Deductions from deemed profit
No deduction of any expense related to your profession or Freelancing services (eg. Rent, internet charges, books subscription, salaries, water, electricity etc.) is allowed from such deemed profit. Because It is deemed that deduction of all such expenses is already given in calculating deemed profit.
Section 30 to 38 of Income Tax Act ,cover deduction of all these expenses. Also disallowance under sections 40, 40A, 43B will not be applicable as the income is deemed under this section.
WDV of depreciable assets
The written down value of any asset of an eligible profession shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant years.
Maintenance of Accounts
The assessee is also not required to maintain books of account under section 44AA if he files return under section 44ADA. However, such an assessee shall be expected to maintain minimum records such as bill books to verify his gross receipts as and when required.
Advance Tax for Freelancers & Professionals
Persons filing return under this section are also required to pay Advance tax. Freelancers/professionals opting for this scheme are required to pay advance tax in one installment only, on or before 15th March of the financial year.
It is very important to note here that If you opt for Section 44ADA and also have other income sources (like salary, capital gains, interest, or rent), you can not take the benefit of the lump‑sum advance tax payment on March 15. Instead, Normal provisions of Advance Tax will apply & you must follow the standard four instalment due dates for Advance Tax
| Due Date | Period Covered | Advance Tax Payable |
|---|---|---|
| June 15 | 1 Apr – 15 Jun | 15% of total estimated tax liability |
| September 15 | 16 Jun – 15 Sep | 45% (cumulative) |
| December 15 | 16 Sep – 15 Dec | 75% (cumulative) |
| March 15 | 16 Dec – 31 Mar | 100% (cumulative) |
Note : Advance Tax is payable if your total estimated tax ( after 80C, TDS & Rebate u/s 87A etc.) exceeds Rs.10000 in a Financial Year.
TDS for Freelancers & Professionals
Even as a presumptive taxpayer under 44ADA (e.g., declaring 50% of receipts as income), if your professional receipts in last year exceeded ₹50 lakh, you must deduct TDS (Tax deducted at source)when making relevant payments (e.g., contractor fees, rent, professional services). The law specifically states that TDS provisions override presumptive schemes . Failing to do so can attract Late Fee, interest & penalties (e.g., deemed as ‘assessee in default’). You can check interest, late fee & penalties on Non-compliance of TDS & related provisions here TDS late deposit interest calculator
Due date to file ITR u/s 44ADA
For professionals/freelancers opting for the presumptive scheme under Section 44ADA, the due date for filing their Income Tax Return (ITR‑4/Sugam) aligns with the standard deadline under Section 139(1). Typically, this deadline falls on July 31st of the Assessment Year. However, for the FY 2024–25 (AY 2025–26), this deadline has been officially extended to September 15, 2025, for non‑audit cases—including Section 44ADA taxpayers—by the Central Board of Direct Taxes. You can check various due dates to pay Advance Tax, TDS , Income Tax & file Income tax return in our Tax Calendar
Examples
Mr. X, a practicing Chartered Accountant has gross receipt of Rs. 42 lakhs . He had paid Rs. 3,60,000 towards rent without deducting tax at source. He has unabsorbed depreciation of Rs. 2,40,000. Calculate his total income if he opts for presumptive taxation under section 44ADA ?
Since , Mr. X is a practicing CA whose gross receipts are not more than Rs. 50 lakhs, he is eligible to opt for section 44ADA. 50% of his gross receipts or a higher amount shall be deemed to be the profits and gains of such profession. So, 50% of 42 lakhs = 21 lakhs, will be deemed to be his total income. Unabsorbed depreciation under section 32 is not allowed as deduction.
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