Can an LLP or private limited company use presumptive tax under section 58?
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Short answer
No. Section 58 of the Income-tax Act, 2025 limits row 3 (the old 44ADA) to a resident individual or a firm other than a limited liability partnership (LLP), and row 1 (the old 44AD) to a resident individual, Hindu undivided family or non-LLP firm.1 An LLP or a company must compute actual profit from books, and a tax audit then follows the section 63 thresholds.12 A traditional partnership firm, which is not an LLP, can use either row if its activity qualifies.1
As a freelance practice grows, many owners move it into a limited liability partnership (LLP) or a private limited company: a design studio taking on staff, a two-founder development shop, or a marketing agency signing larger retainers. That move has a tax cost that is easy to miss: the presumptive scheme stops being available.1
Who can use each row of section 58?
Section 58(11) defines the two kinds of assessee who may use the scheme:1
| Row | Old section | Who can use it |
|---|---|---|
| Row 1, any business | 44AD | "Eligible assessee": a resident individual, Hindu undivided family, or firm other than an LLP, with further conditions |
| Row 3, specified profession | 44ADA | "Specified assessee": a resident individual, or firm other than an LLP |
Section 58(11)(c) takes the meaning of "limited liability partnership" from the Limited Liability Partnership Act, 2008.1 A company appears in neither definition.1
What does an LLP or company do instead?
An LLP or company computes actual profit from its books: income less allowable expenses such as salaries, subcontractor fees, software subscriptions and depreciation.1 Section 62 requires books once business or professional income or receipts cross its thresholds, and a person carrying on a specified profession keeps books regardless.3
A tax audit follows section 63: for a business when turnover exceeds ₹1 crore, or ₹10 crore where cash receipts and cash payments are each within 5%, and for a profession when gross receipts exceed ₹50 lakh.2 Foreign client payments by bank transfer are not cash, so an exporting agency run as a business will usually meet the low-cash condition on receipts.2
Is an LLP or company ever cheaper anyway?
It can be. Presumptive tax deems 50% of a professional's receipts as profit.1 An agency that pays out more than half its receipts to subcontractors would often show lower actual profit, and an LLP or company also brings liability protection. The trade-off is bookkeeping, possible audits and, for a company, a different rate structure. The comparison is in sole proprietor vs LLP.
What about a traditional partnership firm?
A firm under the Indian Partnership Act that is not an LLP is still a "firm other than a limited liability partnership", so it can use row 3 for a specified profession or row 1 for an eligible business, if it is resident and within the receipt limits.1 Before restructuring, work through the numbers with a chartered accountant (CA).
How did we verify this?
We checked this page against the sources below on 28 October 2026. Read our methodology or report an error.
Frequently asked questions
Can a one-person company use section 58?+
No. A company is not an individual or firm, so neither row 1 nor row 3 of section 58(2) is available to it.1
Can a partnership firm of two developers use the 50% scheme?+
Yes, if it is a firm other than an LLP, is resident in India, carries on a specified profession, and its gross receipts are within ₹50 lakh, or ₹75 lakh with cash within 5%.1
When does an LLP or company need a tax audit?+
Under section 63, when turnover from business exceeds ₹1 crore (₹10 crore with cash receipts and payments each within 5%), or gross receipts from a profession exceed ₹50 lakh.2
If I convert my proprietorship to an LLP mid-year, what happens?+
From the conversion, the LLP cannot use section 58, so its income is computed on actual profit.1 The transfer of the practice has its own tax points, so get advice before converting.
This page is general information for Indian service exporters, not tax or legal advice. Rules change and outcomes depend on your facts, so confirm with a chartered accountant before acting.
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