Can Indian freelancers use section 44ADA (now section 58) to pay tax on 50% of their income?

Presumptive taxation lets a professional declare a fixed share of gross receipts as profit instead of working out actual profit from expenses. For years Indian freelancers knew it as section 44ADA. From 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act, and the scheme for professionals now sits in section 58 (row 3 of its table).¹⁴ The figures did not change.¹⁶

This guide uses "FY 2025-26" for income earned from 1 April 2025 to 31 March 2026 (old Act, assessment year 2026-27) and "tax year 2026-27" for income earned from 1 April 2026 to 31 March 2027 (new Act). Facts are as of October 2026.⁵ Your eligibility depends on what work you do, so treat this as background and confirm with a chartered accountant (CA) before you file.

What is section 44ADA, now section 58, for freelancers?

Section 44ADA, now section 58 row 3 of the Income-tax Act, 2025, is the presumptive tax scheme that lets a professional declare 50% of gross receipts as profit.¹ Income earned up to 31 March 2026 falls under the Income-tax Act, 1961, and income earned from 1 April 2026 under the Income-tax Act, 2025.⁴⁵

The table follows the 2025 Act, which came into force on 1 April 2026, and CBDT's transition FAQs.⁴⁵ CBDT's transition FAQs say a "tax year" is the financial year in which you earn the income, so tax year 2026-27 matches what used to be "previous year 2026-27". Returns for FY 2025-26 are still filed under the old Act and old ITR forms.⁵

Who can use section 58 for professionals?

Section 58 allows the scheme for a "specified assessee": a resident individual, or a resident firm other than a limited liability partnership (LLP), carrying on a "specified profession".¹² Companies and LLPs cannot use it.¹ Section 62(4) of the new Act defines a specified profession as:²

• Professions named first: legal, medical, engineering, architectural, accountancy.²
• Consultancy and design: technical consultancy, interior decoration.²
• Added by name: information technology, company secretary.²
• Notified: any other profession notified by CBDT.²

The old section 44AA(1) named fewer professions and relied on CBDT notifications for the rest. The new Act names information technology and company secretary directly.²⁶ Here is how each common freelance service maps to the list in section 62(4).²⁸

If your work is not a specified profession, row 3 does not apply. Some such freelancers instead look at row 1 of the same section (the old section 44AD), which covers "any business" for a resident individual, HUF or non-LLP firm that does not carry on a specified profession, earn commission, or run an agency business.¹ Row 1 deems 6% of receipts received through banking or online channels (8% of other receipts) as profit, with a ₹2 crore limit (₹3 crore if cash is within 5%).¹ Whether a creative or teaching service counts as a "business" for this purpose is a judgement call, so discuss it with a CA before picking a rate.

How do you use section 58 as a freelancer paid from abroad?

You use section 58 as a freelancer paid from abroad by checking eligibility, totalling gross receipts in rupees, declaring 50% or more as profit and paying advance tax by 15 March.¹³

1. Identify the law for the year: section 44ADA for income earned up to 31 March 2026, section 58 row 3 from 1 April 2026.¹⁵
2. Check you are a specified assessee: a resident individual or a resident firm other than an LLP.¹
3. Check your work is a specified profession: use the table above and section 62(4).²
4. Check the gross receipts limit: ₹50 lakh, or ₹75 lakh if cash receipts are 5% or less.¹
5. Declare 50% or more as profit: or keep books and get an audit if you declare less and income exceeds the basic exemption limit.¹
6. Pay advance tax: in one instalment by 15 March if tax after TDS is ₹10,000 or more.³

Freelancers paid from abroad usually meet the cash test easily, because inward remittances arrive by bank transfer. Convert each receipt at the rupee value recorded in your books (your bank advice or FIRA, the Foreign Inward Remittance Advice, is the usual evidence) and confirm the method with your CA. If you use the section 44ADA calculator, enter gross receipts in rupees for the tax year you are filing for.

What limits, rates and deadlines apply under section 58?

For tax year 2026-27, section 58 row 3 sets a ₹50 lakh gross receipts limit (₹75 lakh with cash within 5%) and 50% deemed profit, the same as section 44ADA for FY 2025-26.¹⁶

• Gross receipts limit: ₹50 lakh, or ₹75 lakh if cash receipts are 5% or less of gross receipts.¹
• Deemed profit: 50% of gross receipts, or a higher amount if you choose to declare it.¹
• Cash test: a cheque or bank draft that is not account payee counts as cash.¹
• No other deductions: once you accept the 50% figure, you cannot also claim expenses, depreciation or other business deductions against it, and the written-down value of your assets (laptop, camera) is treated as if depreciation was claimed every year.¹

The deadlines come from the Income-tax Act, 2025 and CBDT's Budget 2026 FAQs.³¹⁰

Other taxpayers pay advance tax in four instalments.³ In Example 1 below, the developer would pay about ₹3,86,880 by 15 March 2027, minus any TDS that Indian clients have already deducted.³ See advance tax for freelancers.

Does a freelancer under section 58 need books of account and a tax audit?

A freelancer under section 58 may still need books of account, but needs a tax audit only in specific cases. Section 62(1)(a) of the Income-tax Act, 2025 requires a person carrying on a specified profession to keep books of account and other documents, without the income or turnover thresholds that apply to others, and the Act does not state an exception for someone who declares 50% under section 58(2).²³ Many older guides say presumptive filers need not keep books; that was the common reading of the 1961 Act, and how section 62(1)(a) applies to a 50% declaration under the new Act is a point to confirm with your CA.²

• Books prescribed: rule 46 of the Income-tax Rules, 2026 prescribes the books (cash book, ledger, copies of bills of ₹250 or more and similar records).⁸
• Small practices: rule 46(3) relaxes the books for practices whose gross receipts are within ₹1,50,000.⁸
• Retention: rule 46(9) requires books to be kept for seven tax years.⁸
• IT freelancers: rule 46 names legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, authorised representative and film artist work, but not information technology; an IT freelancer is still covered by section 62(1)(a) itself.²⁸
• Tax audit: under section 58(3), if you declare profit below 50% of gross receipts and your total income exceeds the basic exemption limit, you must keep books under section 62 and get an audit under section 63.¹³
• No audit at 50%: if you declare 50% or more, section 63(2) says the audit provision does not apply, even with receipts between ₹50 lakh and ₹75 lakh.³

See section 62 specified professions and tax audit for freelancers.

How is tax calculated under section 58 for a freelancer paid in US dollars?

Tax under section 58 for a freelancer paid in US dollars is calculated on 50% of gross receipts in rupees, at the new-regime slabs, with the section 156 rebate and 4% cess.¹³⁹ The examples below are for tax year 2026-27 under the new regime. They use an illustrative rate of ₹88 per US dollar and assume no other income.

The new-regime slabs in section 202(1) for tax year 2026-27 are: nil up to ₹4 lakh, 5% from ₹4 lakh to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh and 30% above ₹24 lakh.³

How much tax does a software developer billing $60,000 pay under section 58?

For example, a software developer billing $60,000 in the year pays ₹3,86,880 under section 58 row 3, the section 202(1) slabs and 4% cess.¹³⁹

On ₹26,40,000 the slab tax is ₹20,000 + ₹40,000 + ₹60,000 + ₹80,000 + ₹1,00,000 + ₹72,000 = ₹3,72,000.³

How much tax does a translator billing $15,000 pay under section 58?

Say a translator bills $15,000 in the year, assuming the scheme applies to their work. Gross receipts of ₹13,20,000 give deemed income of ₹6,60,000. Slab tax is ₹13,000. Because total income is not above ₹12 lakh, the section 156 rebate (the old section 87A) cancels the tax, up to ₹60,000. Tax payable is nil.³

Note: The section 156 rebate has marginal relief. If income is slightly above ₹12 lakh, tax is capped at the amount by which income exceeds ₹12 lakh.³ The standard deduction applies to salary only, so it does not reduce presumptive professional income.

Which ITR form does a presumptive freelancer file?

For FY 2025-26 (assessment year 2026-27), the e-Filing portal says ITR-4 (Sugam) is for a resident individual or non-LLP firm with presumptive income under section 44AD, 44ADA or 44AE and total income up to ₹50 lakh.⁷

• ITR-4 exclusions: it cannot be used by anyone who holds assets outside India, has signing authority in a foreign account, or has "income from any source outside India", among other exclusions.⁷
• ITR-3: everyone else with business or professional income files ITR-3.⁷
• Foreign source question: whether fees from foreign clients count as income from a source outside India depends on where the work is done and the contract terms. If a foreign client withheld tax and you want to claim foreign tax credit, or you hold a foreign bank or platform balance at year end, ask your CA whether ITR-3 is the safer choice.⁷
• Tax year 2026-27: returns are filed in 2027 on forms notified under the new Act. Check the form conditions when they are released.³¹⁰

When should a freelancer not opt for section 58?

A freelancer should not opt for section 58 when real expenses exceed 50% of receipts, receipts exceed the limit, the business is an LLP or company, there is a loss, or the work is not a specified profession.¹²

• High expenses: your real expenses are above 50% of receipts, which is common for an agency paying subcontractors or for a production house. Declaring actual profit below 50% means keeping books and, if total income is above the basic exemption limit, getting a tax audit under section 58(3).¹
• Receipts over the limit: your receipts exceed ₹75 lakh, or ₹50 lakh with more than 5% in cash, so the scheme is not available at all.¹
• LLP or company: row 3 does not apply.¹
• A loss: the deemed 50% profit would tax income you did not earn.¹
• Not a specified profession: using row 3 anyway risks the claim being rejected.¹²

Unlike row 1 (the business scheme), row 3 has no five-year lock-in.¹

What are the common mistakes with section 44ADA and section 58?

The common mistakes with section 44ADA and section 58 are assuming every freelance service is a specified profession, assuming no books are needed, and mixing up the year labels.¹²⁵

• Assuming every service qualifies: graphic design, writing, marketing and tutoring are not named in section 62(4).²
• Assuming no books: section 62(1)(a) states no exception for a 50% declaration.²
• Mixing year labels: FY 2025-26 returns use the old Act; tax year 2026-27 uses the new one.⁵
• Claiming expenses on top of 50%: the 50% figure replaces expenses and depreciation.¹
• Forgetting GST: presumptive tax covers income tax only; GST is separate. See GST on export of services.

Keep your inward remittance records and FIRAs, because they prove both your receipts and your export realisation.