Under Section 44ADA of the Income Tax Act, 1961, non-salaried professionals can opt for presumptive taxation by declaring 50% or more of their gross receipts as profits. According to Mint reports, this scheme eliminates the requirement to maintain detailed books of account, making it particularly attractive for contractual workers and freelancers. The provision specifically states that assessees opting for presumptive taxation are not required to maintain books of account, provided income is declared at 50% or more of gross receipts.
As reported by Mint, declaring income below 50% of gross receipts under Section 44ADA requires maintaining prescribed books of account as per Section 44AA. These include cash book, journal, ledger, copies of bills for transactions exceeding ₹250, and original bills for expenses exceeding ₹50. Additionally, income will be subject to tax audit under Section 44AB if total income crosses the basic exemption limit, resulting in higher compliance requirements.
According to Mint analysis, declaring income at or above 50% under Section 44ADA eliminates compliance burdens, though it may lead to higher tax outgo if actual income is significantly lower. The report emphasizes that declaring income at 50% without maintaining detailed expense records is in line with provisions and should not trigger scrutiny by itself. However, choosing this option requires careful evaluation of both approaches to determine the most beneficial option for individual circumstances.
As reported by Mint, the current provisions apply to income earned during FY 2025-26 (AY 2026-27). For income earned from 1 April 2026 (FY 2026-27), the provisions of section 58 of the Income Tax Act, 2025, will apply. This transition period requires taxpayers to understand the differences between the current and upcoming tax frameworks when making their compliance decisions.
