Income Tax & Small Business Compliance
Section 44AD & 44ADA Presumptive Taxation Calculator
Evaluate eligibility for presumptive taxation under Section 44AD (businesses) and Section 44ADA (professionals), apply 6%/8% and 50% statutory rates, verify 5% cash thresholds, and check Section 44AB tax audit triggers.
Quick Presets
1. Scheme & Entity Eligibility
Select presumptive tax provision and legal constitution
2. Annual Turnover / Gross Receipts
Split receipts between digital/banking channels and cash
UPI, NEFT, RTGS, IMPS, Cards, Account Payee Cheque
Physical cash collections (must be ≤ 5% for enhanced limit)
3. Actual Books of Accounts (Optional)
Compare actual net profit with presumptive benchmark
Leave blank if opting strictly for presumptive benchmark
4. Statutory Ineligibility Checks
Flags for Section 44AD restrictions
Books of Accounts Exempt (Section 44AA). Declare profit of ₹7,60,000.00 or more to file ITR-4 without an audit.
Presumptive Assessment & Audit Determination
- Total Annual Turnover / Receipts
- ₹1,20,00,000.00
- Cash Receipts Ratio
- 16.67% (> 5% Cash)
- Applicable Statutory Ceiling
- ₹2,00,00,000.00
- Effective Presumptive Profit Rate
- 6.33%
- Estimated Tax on Presumptive Income
- ₹27,040.00
Frequently asked questions
Who is eligible for Presumptive Taxation under Section 44AD?
Section 44AD applies to resident Individuals, Hindu Undivided Families (HUFs), and Partnership Firms (excluding LLPs) engaged in any business other than: (1) plying, hiring, or leasing goods carriages (covered under Section 44AE), (2) agency business, (3) commission or brokerage, and (4) specified professions covered under Section 44ADA.
What are the enhanced limits for Section 44AD and 44ADA after Budget 2023?
Under the Finance Act 2023, the turnover threshold for Section 44AD was raised from ₹2 Crore to ₹3 Crore, and the gross receipts threshold for Section 44ADA was raised from ₹50 Lakh to ₹75 Lakh, provided aggregate cash receipts do not exceed 5% of the total turnover or gross receipts.
How does the 6% vs 8% profit split work under Section 44AD?
Turnover received through account payee cheques, bank drafts, electronic clearing systems (ECS), or prescribed electronic modes (UPI, NEFT, RTGS, IMPS, debit/credit cards) is taxed at a presumptive profit rate of at least 6%. Turnover received in cash or non-account-payee modes is taxed at a presumptive profit rate of at least 8%.
When is a Tax Audit under Section 44AB mandatory?
A tax audit by a Chartered Accountant under Section 44AB is triggered if: (1) your turnover exceeds the statutory ceiling (₹3 Cr / ₹2 Cr for 44AD, ₹75L / ₹50L for 44ADA), OR (2) you declare net profits lower than the statutory minimum (e.g., < 6%/8% for 44AD or < 50% for 44ADA) AND your total income exceeds the basic exemption limit (₹3,00,000 under the New Tax Regime).
What is the 5-year lock-in rule under Section 44AD(4)?
If an assessee opts for Section 44AD in any year and subsequently declares profits lower than the presumptive minimum in any of the next 5 assessment years, they cannot opt back into Section 44AD for the next 5 consecutive assessment years. Furthermore, they must maintain books of accounts under Section 44AA and undergo a tax audit under Section 44AB.
Are LLPs and Private Limited Companies eligible for Section 44AD or 44ADA?
No. Limited Liability Partnerships (LLPs) and Private/Public Limited Companies are statutorily excluded from both Section 44AD and Section 44ADA. They must maintain regular books of accounts and undergo statutory audit.