Presumptive Taxation: Definition, Meaning & Guide for Indian Businesses

Presumptive taxation lets small businesses pay tax on a fixed percentage of turnover instead of computing actual profit. Sections 44AD (business), 44ADA (profession), 44AE (transport).

What is Presumptive Taxation?

Presumptive schemes reduce the bookkeeping burden for small businesses. Section 44AD: businesses with turnover up to ₹3 crore (₹2 cr earlier) declare 8% of cash turnover or 6% of digital turnover as deemed income. Section 44ADA: professionals (CA, doctor, architect, etc.) with gross receipts up to ₹75 lakh declare 50% as deemed income. Section 44AE: small transporters with up to 10 goods vehicles. Once opted, you must stay for 5 years; cannot maintain regular books to claim lower profit.