On ₹50 lakh of receipts, filing under one presumptive section rather than the other changes your deemed income by ₹22 lakh. Same money in, same work done. The difference is a classification question that a surprising number of people get wrong by default.
The two schemes
Presumptive taxation lets eligible taxpayers declare a fixed percentage of receipts as income, skip detailed books, and skip audit. Under the Income-tax Act, 2025 both schemes now sit within Section 58, though everyone still calls them 44AD and 44ADA.
| 44AD — business | 44ADA — profession | |
|---|---|---|
| Deemed income | 8% of receipts, or 6% where receipts are digital | 50% of gross receipts |
| Turnover limit | ₹2 crore | ₹50 lakh |
| Enhanced limit (cash under 5%) | ₹3 crore | ₹75 lakh |
| Who can use it | Resident individuals, HUFs, partnership firms (not LLPs) | Resident individuals and firms (not LLPs) |
The classification test
44ADA is available only to specified professionals. That list is narrow: legal, medical, engineering, architectural, accountancy, technical consultancy and interior decoration, plus notified categories including film artists and authorised tribunal representatives.
If your work does not fall in that list, you are a business for this purpose — and 44AD, with its 6% or 8% deemed income, is the applicable scheme.
This is where the money is lost. A marketing consultant, an agency owner, a trainer or a content creator is frequently filed under 44ADA because "profession" sounds right in plain English. Plain English is not the test. The statutory list is.
"Profession" in ordinary speech is not the test. The statutory list of specified professionals is, and it is shorter than people assume.
Where it is genuinely unsettled
I want to be straight about this rather than sound more certain than the law is.
Content creators were given a dedicated profession code — 16021, Social Media Influencer — which appears in ITR-3 and ITR-4. But they were never added to the list of specified professionals. So the code implies one thing and the eligibility test implies another, and the position has not been settled by a clarification.
Our view is that most creators should file under 44AD as a business. But this is a position, not a certainty, and a position needs to be written down with its reasoning at the time it is taken — not reconstructed at assessment three years later. Anyone using a presumptive section in a grey area should have a note on file.
The 6% versus 8% split
Under 44AD, the lower 6% rate applies to receipts collected through banking channels or prescribed digital modes. The 8% rate applies to cash receipts. In practice, most service businesses banking everything qualify wholly at 6% — but you have to be able to show it, which means one clean business account rather than a mix of personal UPI and cash.
What you give up
Presumptive is simpler, not always cheaper
- You cannot separately claim business expenses — the deemed percentage is taken to include them.
- If your actual margin is lower than the deemed rate, you pay tax on profit you did not make.
- Opting out after opting in carries restrictions on re-entry.
- Advance tax is still due, though presumptive taxpayers may pay it in one instalment by 15 March.
For a high-margin service business banking its receipts, presumptive taxation under 44AD is often genuinely efficient. For a low-margin trading business, it can be worse than keeping books. The scheme is a simplification, not automatically a saving — and the first question is always which scheme you are actually eligible for.
This article is general guidance as at 1 July 2026 and is not advice on any specific situation. References reflect the Income-tax Act, 2025 (in force from 1 April 2026), the CGST and IGST Acts as amended, and GST rates effective 22 September 2025. Please obtain advice on your own facts before acting.