Presumptive tax
44AD, 44ADA and 44AE without books
Worked example
Using the default values, presumptive tax gives a tax on presumptive income of ₹0.
| Item | Value |
|---|---|
| Scheme | 44AD |
| Turnover limit | ₹3,00,00,000 (95%+ digital) |
| Within limit | Yes |
| Basis | 6% on digital receipts, 8% on cash |
| Digital receipts at 6% | ₹1,20,000 |
| Cash receipts at 8% | ₹0 |
| Income declared | ₹1,20,000 |
| As % of turnover | 6.0% |
| Deductions | ₹0 |
| Taxable income | ₹1,20,000 |
| Tax before cess | ₹0 |
| Cess 4% | ₹0 |
| Total tax | ₹0 |
| Effective on turnover | 0.0% |
What you need
- Scheme
- Turnover or gross receipts
- Received digitally
- Goods vehicles (44AE only)
- Gross vehicle weight each (44AE)
- Months each vehicle was owned
- Deductions claimed
- Tax regime
Questions
What are the turnover limits?
44AD allows ₹2 crore, rising to ₹3 crore where cash receipts are 5% or less of the total. 44ADA allows ₹50 lakh, rising to ₹75 lakh on the same condition. 44AE is limited to ten goods vehicles rather than by turnover.
Is presumptive tax always cheaper?
No. If your real margin is below the presumptive rate you pay tax on profit you never made. A retailer at a 3% margin declaring 6% pays roughly double. The scheme buys simplicity, not savings — compare against your actual profit before opting in.
Can I declare more than the presumptive rate?
Yes, and you should if your actual profit is higher. Declaring less is what triggers the audit requirement.
Important
Presumptive taxpayers pay the whole of their advance tax in a single instalment by 15 March, not in four. Declaring less than the presumptive rate means books under section 44AA and an audit under 44AB. Opting out of 44AD locks you out of it for five years, so weigh a one-year saving against that. The new regime allows almost no deductions — the field above is ignored unless you switch to old.