Presumptive Taxation: 44AD vs 44ADA vs 44AE

By the MyTaxLocker Team · Updated 11 June 2026

Presumptive taxation lets eligible small businesses and professionals declare income as a fixed percentage of turnover or receipts — instead of maintaining detailed books. It's the simplest way for freelancers and small traders to file, and it's filed on ITR-4 (Sugam).

Section 44AD — small businesses

For eligible resident small businesses (individuals, HUFs, and firms other than LLPs) under a turnover threshold, income is presumed at a set percentage of turnover — a lower percentage for digital/banking receipts and a higher one for cash. You declare that percentage as your income without itemising expenses.

Section 44ADA — professionals

For specified professionals (such as consultants, freelancers in eligible fields, and others) with gross receipts below a threshold, income is presumed to be 50% of gross receipts. The other half is treated as your expenses — no bookkeeping required.

Section 44AE — goods carriages

For those who own and operate goods carriages (up to a maximum number of vehicles), income is presumed at a fixed amount per vehicle per month, based on vehicle capacity.

The catches worth knowing

• If you declare lower than the presumptive income, you may have to maintain books and get a tax audit.
• 44AD has a continuity rule: opt out after opting in, and you can be barred from returning to it for several years.
• Advance tax still applies — presumptive filers generally pay it in a single installment by 15 March (see our advance-tax guide).

Turnover and receipt thresholds are revised periodically, so confirm the current limits for your year.