Section 58: presumptive taxation, completely explained

Three famous old sections — 44AD, 44ADA and 44AE — now live inside one: Section 58 of the Income-tax Act, 2025. If you freelance, consult or run a small business, this one section probably decides your entire tax life.

What "presumptive" means

Instead of keeping books and proving every expense, the law lets small taxpayers presume their profit at a fixed percentage of receipts and pay tax on that. No expense records, no audit, one-line computation. In exchange, you can't claim business expenses separately — the percentage is deemed to include them all (sections 30–38 deductions are treated as already allowed).

The two tracks — and why everyone confuses them

	Profession track	Business track
Old name	44ADA	44AD
New home	s.58(2), Table Sl. 3	s.58(2), Table Sl. 1
Who	"Specified professions" under s.62(4) — see below	Almost every other small business, including most freelancers
Presumed profit	50% of gross receipts	6% of digital receipts, 8% of cash
Receipts limit	₹50 lakh (₹75 lakh if cash ≤ 5%)	₹2 crore (₹3 crore if cash ≤ 5%)

The s.62(4) list is closed: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, information technology and company secretary. Two more — film artist and authorised representative — ride in via a 1977 CBDT notification (S.O. 17(E)) that s.536 of the new Act keeps alive.

Everyone else — writers, designers, video editors, marketers, translators, coaches — is a business, not a profession. That's not a downgrade; it's usually the better deal: 6% presumed profit instead of 50%, and a limit four times higher. Unsure where you fall? Run the eligibility checker.

The 5% cash test

Both limits jump — ₹50L→₹75L and ₹2cr→₹3cr — when cash receipts are at most 5% of total receipts. One large cash payment can drop you back to the lower limit, and if that pushes you over it, presumptive goes away entirely for the year. Simple rule: keep everything digital.

The floor rule

50% and 6%/8% are floors, not caps. Section 58 requires declaring your actual profit if it is higher than the presumed figure. In practice most filers declare the floor; just know the law's wording — "or such higher amount as claimed to have been earned" — before you sign the return.

Why many freelancers now pay zero tax

The new regime's rebate (s.156) wipes out tax up to ₹12 lakh of total income. Combine that with presumptive math: a business-track freelancer can bill up to ₹2 crore digitally (presumed income 6% = ₹12L, exactly at the rebate line) — and a 50% professional up to ₹24 lakh (presumed ₹12L) — with zero income tax, subject to the fine print. Run your own numbers here.

Advance tax: one date instead of four

Presumptive filers pay the whole year's advance tax in one instalment by 15 March (s.408(2)) instead of the usual four (15 Jun/Sep/Dec/Mar). Missing it costs 1% per month simple interest. The scheduler shows your dates.

What presumptive filers still don't escape

GST is a separate law — presumptive income tax says nothing about whether you need GST registration or an LUT for exports.
ITR form traps — foreign bank balances (PayPal/Wise holding accounts) can push you from ITR-4 to ITR-3 even while staying presumptive.
Regime lock-in — opting out of the default new regime with business income is a once-in-a-lifetime switch-back; choose with a CA.
The old opt-out lock-in concept — the 1961 Act barred a 44AD filer who quit the scheme from re-entering for 5 years; how exactly this carries into s.58 is one to confirm with a CA before you flip-flop between presumptive and books.

Try it yourself

Presumptive eligibility checker — which track are you on?
Presumptive tax calculator — receipts → income → tax, both regimes.
Advance tax scheduler — your dates and amounts.
1961 → 2025: the full section mapping.

Last verified: 2 September 2026 — tax Act 2025, and CBDT Notification S.O. 17(E) (1977) · Not tax advice — confirm your case with a Chartered Accountant.