Section 44ADA is now section 58: what changed, and what didn’t

Indian tax law contains one genuinely great deal for freelancers, and it’s buried under the least memorable name possible: section 44ADA, presumptive taxation (presumptive taxation: A scheme that lets you declare a fixed share of your receipts as income without proving any expenses. From FY 2026-27 it lives in one place, section 58; the old 44ADA covered professionals and 44AD small businesses.) for professionals. As of 1 April 2026 it has an even less memorable one, section 58 (section 58: The Income-tax Act, 2025 provision that from 1 April 2026 replaces sections 44AD, 44ADA and 44AE with a single table. Professionals are serial 3 of that table, still at 50% of gross receipts.). Most people who’d benefit from it either haven’t heard of it or have heard something wrong about it. Let’s fix that.

The deal in one sentence

If you’re an eligible professional, the law lets you declare half of your gross receipts as your taxable income, without having to prove a single expense. (Gross receipts (gross receipts: Everything clients paid you across the year, before any costs are taken off.) just means: everything clients paid you in the year, before any costs.) No expense ledgers for tax purposes, no receipts to defend, dramatically simpler paperwork.

The logic: the government simply assumes half of what a professional earns goes on expenses, and taxes the other half at the normal slab rates (slab rates: The step-by-step income tax rates everyone pays, rising in bands as income rises.). It is not a 50% tax; it’s a 50% assumption about expenses, and then ordinary tax applies on the remaining half.

What changed on 1 April 2026: 44ADA is now section 58

The Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026, which makes Tax Year 2026-27 (tax year: The single 12-month period you earn in and are taxed on, running 1 April to 31 March. It replaced the old previous-year and assessment-year pair on 1 April 2026, so income earned now sits in Tax Year 2026-27, with no second year to work out.) the first year run entirely under the new law. For presumptive taxation the change is structural rather than substantive: sections 44AD (small businesses), 44ADA (professionals) and 44AE (goods carriage) have been merged into a single section 58 (section 58: The Income-tax Act, 2025 provision that from 1 April 2026 replaces sections 44AD, 44ADA and 44AE with a single table. Professionals are serial 3 of that table, still at 50% of gross receipts.), laid out as a table. Professionals are serial 3 of it.

What stayed the same:

• 50% of gross receipts as your presumed income, with no expenses to prove.
• The ₹50 lakh ceiling, extended to ₹75 lakh where cash receipts are no more than 5% of the total.
• Eligibility: the same list of specified professions.
• Advance tax in one instalment by 15 March, now under section 408(2) (section 408(2): The advance-tax instalment rule in the Income-tax Act, 2025. Sub-section (2) is the one that lets presumptive taxpayers settle the whole year in a single payment by 15 March instead of four.), with interest at 1% a month under sections 424 and 425 (sections 424 and 425: The interest provisions of the Income-tax Act, 2025, replacing the old 234B and 234C. Both charge 1% a month: 424 on advance tax left unpaid, 425 on instalments paid short or late.) if you are late.

What is worth watching: section 58 is more explicit than the old 44ADA that losses, allowances and deductions under other provisions cannot be set off against presumptive income. If you are carrying forward a loss, or were counting on a set-off, that is a conversation to have with your CA rather than an assumption to make.

One phrase that alarms people, and shouldn’t: the new text computes your income as the presumptive amount or the profit claimed to have been actually earned, whichever is higher. Read quickly, that sounds like you must work out your real margin and declare it. You don’t. The entire point of the scheme is that you are not required to keep books, so there is no actual-profit figure the law expects you to produce. What the phrase does is leave a door open: you may declare more than half if you want to, which is genuinely useful when a bank is assessing your income for a loan. Fifty per cent remains the floor almost everyone files on.

Who qualifies

Two tests, both must pass.

The profession test

You practice one of the specified professions: legal, medical, engineering or architecture, accountancy, technical consultancy, interior decoration, and certain notified fields. In practice, most software developers, tech consultants and designers billing for professional services fall under technical consultancy, but classification has edge cases: confirm yours with a CA once.

The ceiling test

Gross professional receipts within the limit: ₹50 lakh a year, extended to ₹75 lakh if at least 95% of your receipts are digital (bank transfer, UPI, cards). For most freelancers paid by bank transfer, ₹75 lakh is the practical ceiling.

What people get wrong

“I still have to track expenses”

For tax under 44ADA, no. The 50% presumption replaces itemised expenses; the shoebox of receipts stops being a legal requirement. You’ll still want your receipts for your own visibility (knowing where the money goes is how you price properly), but that’s discipline, not law.

“Advance tax still applies quarterly”

No. Presumptive taxpayers pay advance tax (advance tax: Tax you pay yourself during the year, in instalments, on income nobody is cutting TDS from.) in one instalment: 100% by 15 March, under section 408(2) of the new Act. No June, September or December deadlines. If you’re under the scheme, the whole September advance-tax season simply isn’t yours (here are the dates it would otherwise be).

“50% is unfair, my expenses are only 20%”

Then the scheme is favouring you: you’re taxed as if half your receipts were expenses even though far less was. It is most lucrative for low-expense professionals, which is exactly what most independent software and design work is. Section 58 sets 50% as the floor, and because the scheme exempts you from keeping formal books, you are not required to track or prove what your margin actually was. You may declare more if you choose to, which is worth knowing when a lender wants to see a higher income. If your real margin sits far above half and you do keep formal accounts, put it to your CA once so your declaration reads cleanly against the new wording.

“I can’t claim anything else”

You can’t claim business expenses on top of the 50% assumption, but the usual tax-saving deductions apply to you like anyone else under the old regime (regime: India runs two income tax rate systems, old and new, and you pick one each year. Our calculator shows both, so you do not need to remember which is which.): what everyone still calls 80C for investments and 80D for health insurance, now sections 123 (with schedule XV) and 126 of the new Act. The new regime’s rates apply normally too.

When 44ADA is the wrong choice

Honesty requires the other side.

• Real expenses well above 50%. If you run studio rent, salaries, or heavy equipment costs, itemising actual expenses under regular provisions can beat the presumption. Run both numbers.
• Receipts above the ceiling. Past ₹75 lakh, you’re out of the scheme and into regular books and audit territory.
• Declaring less than 50%. You may declare income lower than the presumption, but then books and audit requirements come back. For most people this defeats the point.

The decision is a one-hour conversation with a CA, once a year, with real numbers in hand. Which brings us to the practical problem.

The catch nobody mentions: you still need to know your receipts

44ADA frees you from proving expenses. It does not free you from knowing your gross professional receipts, accurately. And that’s where the bank statement problem walks back in: receipts means money earned from clients, not every credit in your account. Family transfers, loans, refunds and your own salary (if you’re a salaried moonlighter) don’t belong in the number, and interest income sits separately under other sources (income from other sources: The bucket in your return for income that is not salary or business, most commonly bank interest. It is taxed, just not as freelance income.) (the full taxonomy is in this piece). Overstate your receipts by sweeping bank noise in, and the 50% presumption cheerfully taxes half your mother’s Diwali transfer.

CleanTab was built around exactly this: every deposit in your imported statement gets a written reason to count as professional income or stay out, your running receipts total stays honest all year, and the Tax Jar knows the presumptive rules, including the 15 March single instalment. Everything lives in your own Google Drive, not our database.

General information, not tax advice: eligibility and regime choices depend on your facts, and your CA has the last word. CleanTab prepares; a human files.