What is section 44ADA?
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Short answer
Section 44ADA of the Income-tax Act, 1961 is the presumptive taxation scheme for professionals.13 An eligible professional declares 50% of gross receipts as income.1 Gross receipts must be within ₹50 lakh, or ₹75 lakh where cash receipts are 5% or less.13 From tax year 2026-27, the same scheme is section 58(2), Table row 3, of the Income-tax Act, 2025.12
| Full form | Governed by | Who needs it | Where it is used | Related terms |
|---|---|---|---|---|
| Section 44ADA, Income-tax Act, 1961 (now section 58(2), Table row 3, Income-tax Act, 2025)12 | Income-tax Act, 2025, section 58, for income earned from 1 April 20261 | Resident individuals and firms other than LLPs in a specified profession | Income tax returns of professionals, including freelancers paid from abroad13 | Presumptive taxation, section 44AD, specified profession, tax year |
Ask an Indian freelancer how they pay income tax, and "44ADA" is a common answer. The Income-tax Act, 2025 came into force on 1 April 2026, and the professional scheme moved to section 58 with the same rules and a new reference.15
What does section 44ADA mean in simple words?
Section 44ADA lets a professional pay tax on half of gross receipts, without keeping detailed books or claiming expenses.13 It is now section 58(2), Table row 3, for income from tax year 2026-27.1
- Deemed income: 50% of gross receipts, or more if you choose.1
- Receipts limit: ₹50 lakh, or ₹75 lakh if cash receipts are 5% or less.13
For example, a software developer billing only foreign clients by bank transfer can use the higher limit, since bank transfers are not cash.1
Why does section 44ADA matter for Indian exporters and freelancers?
Section 44ADA matters because it applies equally to fees from foreign clients and Indian clients; what matters is total gross receipts for the year.13
- Income tax: tax is calculated on the deemed income under the slab rates you choose.1
- Books of account: declaring at least the presumptive income avoids books and audit requirements.1
- Cash test: export receipts arrive by bank transfer, so they do not count as cash; cash, and cheques or drafts that are not account payee, do.1
The scheme can simplify compliance for a professional with mostly foreign clients.1
How does section 44ADA work?
Section 44ADA works by treating a fixed share of receipts as income for eligible professionals.13
| Point | Rule |
|---|---|
| Who | Resident individual, or resident firm other than an LLP |
| Which work | A specified profession |
| Deemed income | 50% of gross receipts, or more if you choose |
| Receipts limit | ₹50 lakh, or ₹75 lakh if cash receipts are 5% or less |
| Old reference | Section 44ADA, Income-tax Act, 1961 (income up to 31 March 2026) |
| New reference | Section 58(2), Table row 3, Income-tax Act, 2025 (from tax year 2026-27) |
The table draws on section 58 and the e-Filing portal's ITR-4 FAQs.13 CBDT's transition FAQs explain that a "tax year" is the financial year in which the income is earned, so tax year 2026-27 runs from 1 April 2026 to 31 March 2027.2
For example, a freelance developer receives the equivalent of ₹30,00,000 from foreign clients, all by bank transfer. Under row 3, deemed income is 50%, or ₹15,00,000, and expenses such as software subscriptions and a laptop are treated as already covered by the other 50%.1
How do you check whether section 44ADA applies to you?
You check by confirming that your work is a specified profession and your receipts are within the limit.13
- Status: a resident individual, or a resident firm other than an LLP.1
- Profession: the e-Filing portal's FAQs for the 1961 Act list legal, medical, engineering or architectural, accountancy, technical consultancy, interior decoration and other professions notified by CBDT.3 Section 62(4) of the 2025 Act also names information technology and company secretary directly.4
- Receipts: total gross receipts within ₹50 lakh, or ₹75 lakh with cash at 5% or less.1
Run your numbers in the section 44ADA calculator, and see section 44ADA for freelancers for eligibility by profession.
What is the difference between section 44ADA and section 44AD?
Section 44ADA is the presumptive scheme for specified professions, while section 44AD is the scheme for eligible businesses.13
| Scheme | New reference | Deemed profit | Receipts limit | Best for |
|---|---|---|---|---|
| Section 44ADA | Section 58(2), Table row 3 | 50% of gross receipts | ₹50 lakh, or ₹75 lakh if cash is 5% or less | Specified professionals |
| Section 44AD | Section 58, business row of the Table | 6% of receipts through banking or online channels, 8% of others | ₹2 crore, or ₹3 crore if cash is 5% or less | Eligible businesses |
Figures are from section 58 and the e-Filing portal's ITR-4 FAQs.13 The full comparison is in 44AD vs 44ADA.
What do people get wrong about section 44ADA?
People often assume every freelancer qualifies. A copywriter, a social media manager or an online tutor is not named as a specified profession, and should take advice before relying on the scheme.4
- Old reference: for income from 1 April 2026, cite section 58(2), Table row 3, not section 44ADA.12
- LLPs: an LLP cannot use the scheme.1
Confirm your position with a chartered accountant before filing.
Which terms are related to section 44ADA?
These terms explain the rules around the professional presumptive scheme:
- Presumptive taxation: the wider set of schemes in section 58.1
- Section 44ADA's new section number: how the reference moved to the 2025 Act.2
- Specified professions under section 62: the professions that qualify.4
- 44AD vs 44ADA: the business and professional schemes compared.
- Section 44ADA for freelancers: eligibility, worked calculations and advance tax.
How did we verify this?
We checked this page against the sources below on 30 October 2026. Read our methodology or report an error.
- [1]Income Tax Department: Income-tax Act, 2025, section 58 (presumptive taxation, Table row 3)
- [2]CBDT: FAQs on Interplay and Transition to the Income-tax Act, 2025
- [3]e-Filing portal: ITR-4 (Sugam) FAQs, section 44ADA (checked 28 October 2026)
- [4]Income Tax Department: Income-tax Act, 2025, section 62 (books of account; 62(4) specified profession)
- [5]PIB: Income-tax Act, 2025 comes into force from 1 April 2026
Frequently asked questions
Does section 44ADA still exist in 2026?+
Section 44ADA applies to income earned up to 31 March 2026. For income earned from 1 April 2026, in tax year 2026-27, the same scheme is section 58(2), Table row 3, of the Income-tax Act, 2025, which replaced the 1961 Act on that date.12
Did the section 44ADA limits change under the new Act?+
No. Row 3 of the section 58 Table keeps the section 44ADA terms: 50% deemed income and a ₹50 lakh gross receipts limit, or ₹75 lakh where cash receipts are 5% or less of gross receipts. Only the section reference changed for income from tax year 2026-27.13
Can a freelance graphic designer use section 44ADA?+
Only if the work falls within a specified profession. Section 62(4) of the Income-tax Act, 2025 lists professions such as information technology, technical consultancy and interior decoration, but not graphic design by name, so a graphic designer should confirm with a chartered accountant before relying on section 44ADA.4
Do I need books of account under section 44ADA?+
Not if you declare at least the presumptive income under section 44ADA, now section 58(2) row 3. If you declare less than 50% of gross receipts and your total income exceeds the basic exemption limit, books of account and an audit are required under the new Act.1
Do foreign receipts count as cash for the section 44ADA 5% test?+
No. Export receipts arrive by bank transfer, so they do not count as cash for the section 44ADA 5% test. Cash, and cheques or drafts that are not account payee, do count, so a professional paid only by wire can use the ₹75 lakh limit.1
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.
Keep reading
Can Indian freelancers use section 44ADA (now section 58) to pay tax on 50% of their income?
How presumptive tax for professionals works for Indian freelancers paid in foreign currency: old 44ADA, new section 58, limits, 50% income, advance tax.
TaxWhat is the new section number for section 44ADA under the Income-tax Act, 2025?
Section 44ADA is now section 58(2), Table row 3 of the Income-tax Act, 2025. Old-to-new section map for freelancers, and which number to use for which year.
GlossaryWhat is presumptive taxation?
Presumptive taxation taxes a fixed share of receipts as profit instead of actual profit. How it works for Indian freelancers and exporters from tax year 2026-27.
TaxWhat is the difference between 44AD and 44ADA for Indian freelancers?
44AD vs 44ADA, now rows 1 and 3 of section 58 of the Income-tax Act, 2025: who qualifies, 6% vs 50%, limits, lock-in and which suits freelancers and agencies.
TaxWhich professions are 'specified professions' under section 62 of the Income-tax Act, 2025?
The specified professions in section 62(4) of the Income-tax Act, 2025, what they decide (books, presumptive tax), and how designers, writers and tutors fit.