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Presumptive Income under Section 44AD

Declare business income as a flat 8% of cash turnover and 6% of digital turnover, instead of keeping books — for an eligible small business under section 44AD.

Switch calculator — current: Presumptive income — 44AD

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Turnover entry 1
How received

Optional — use if your actual profit is higher than the presumptive figure.

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₹ —

Still needed: at least one turnover entry.

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For guidance only — not tax advice. Every figure is drawn from BharatX’s verified rule book, with the sections and rules shown alongside it.

Presumptive income — 44AD: how it works and FAQs

FY 2025-26 (Income-tax Act 1961) and FY 2026-27 (Income-tax Act 2025) · Updated

How it works

Under section 44AD an eligible small business can declare income as a flat percentage of turnover instead of keeping books: 8% of turnover received in cash and 6% of turnover received digitally or through the bank.

Under section 44AD an eligible small business can declare income as a flat percentage of turnover instead of keeping books: 8% of turnover received in cash and 6% of turnover received digitally or through the bank. You may always declare a higher actual profit. The scheme applies while turnover is within ₹2 crore (₹3 crore if cash receipts are 5% or less).

  1. Split turnover into the part received in cash and the part received digitally / through the bank.
  2. Presumptive income = 8% of the cash turnover + 6% of the digital turnover (section 44AD).
  3. You may declare a higher actual profit if your real profit is more.
  4. Eligibility: a resident individual, HUF or firm (not an LLP) with turnover up to ₹2 crore, or ₹3 crore when cash receipts are 5% of turnover or less (AY 2024-25 onward).

Worked example

Presumptive income under section 44AD = ₹2,00,000.

A shopkeeper has turnover of ₹10,00,000 received in cash and ₹20,00,000 received through the bank in the year.

  1. Cash: 8% × 10,00,000 = ₹80,000.
  2. Digital: 6% × 20,00,000 = ₹1,20,000.
  3. Total turnover ₹30,00,000 is within the limit.

Presumptive income under section 44AD = ₹2,00,000.

Frequently asked questions

How is presumptive income under 44AD calculated?

It is 8% of turnover received in cash plus 6% of turnover received digitally or through the bank. You may declare a higher actual profit if you wish.

What is the turnover limit for section 44AD?

₹2 crore in general, raised to ₹3 crore from AY 2024-25 when cash receipts are 5% of turnover or less.

Who can use the 44AD scheme?

A resident individual, HUF or partnership firm (not an LLP) carrying on an eligible business within the turnover limit. It is not for professionals — they use section 44ADA.

Why is the rate lower for digital receipts?

To encourage non-cash payments, turnover received digitally or through the bank is taxed at 6% instead of 8%.

Every figure the calculator shows lists the sections it relies on under “Legal basis”. For guidance only — not tax advice.