Answer

ITR

Presumptive income for professionals under 44ADA

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  1. Facts

    Sec 44ADA lets resident professionals in specified professions declare 50% of gross receipts as income, if receipts are up to ₹50 lakh, or ₹75 lakh where cash receipts are not more than 5%. Specified professions include medical, legal, engineering, architecture, accountancy, technical consultancy and interior decoration, among others.

  2. Provisions and law

    • Sec 44ADA (now Sec 58)Presumptive professional income at 50% of gross receipts
    • Sec 44AA (now Sec 62)Books of account; lists the specified professions

  3. Analysis

    On ₹40,00,000 receipts, income is ₹20,00,000; no separate expenses are deducted. If you also have other income, tax is computed on the total. If your receipts were ₹60 lakh and cash was under 5%, you can still use 44ADA. If your actual profit is lower than 50%, you need books and an audit to declare less.

  4. Conclusion

    1. Confirm your profession is a specified profession
    2. Total gross receipts and cash share
    3. Declare 50% or more as income
    4. Report receipts and income in Schedule BP

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Presumptive income tax return, ITR-4 (Sugam), Sec 58 (old 44AD, 44ADA, 44AE)

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