Presumptive taxation for freelancers and professionals: Section 58 explained

Many freelancers spend more time worrying about tax paperwork than about the tax itself. India’s presumptive taxation scheme exists to make life simpler for small businesses and professionals. Instead of working out your exact profit from detailed accounts, you declare a fixed share of your receipts as profit and pay tax on that.

From Tax Year 2026-27, the scheme sits in Section 58 of the Income-tax Act, 2025. It brings together three schemes that used to be separate sections of the 1961 Act: Section 44AD for small businesses, Section 44ADA for professionals and Section 44AE for goods carriage operators. This guide covers the part for professionals.

Who can use the scheme for professionals

• Residents only. You must be resident in India for the tax year.
• Specified professions. The scheme covers legal, medical, engineering, architecture, accountancy, technical consultancy and interior decoration, and other professions notified by the government, such as company secretaries, film artists, authorised representatives and information technology.
• Receipts limit. Your gross receipts from the profession must be no more than Rs 50 lakh in the year. The limit rises to Rs 75 lakh if cash receipts are no more than 5% of your total receipts. For most freelancers paid by bank transfer, UPI or international payment platforms, the Rs 75 lakh limit applies.

How the profit is worked out

You declare 50% of your gross receipts as profit from the profession, or a higher amount if your actual profit is higher. That figure is your taxable professional income. You then add any other income, such as interest, and work out tax under your chosen regime.

Under the scheme, the 50% is treated as profit after all your expenses. You cannot claim further deductions for rent, equipment, software or other business costs against that income.

A worked example: Arjun, a freelance developer

Arjun builds web applications for clients in India and abroad. In Tax Year 2026-27 he receives Rs 40 lakh in fees, all by bank transfer. His actual expenses are about Rs 6 lakh.

Because Arjun’s real expenses are much lower than half his receipts, the presumptive method gives a much lower taxable profit. It also means he does not have to maintain full books of account to support his profit figure. The figures assume Arjun has no other income and uses the new regime. They are an illustration, not advice for your situation.

When presumptive taxation may not suit you

• Your expenses are more than half your receipts. Then your real profit is below 50%. You can declare the lower figure, but you generally need to keep regular books, and a tax audit can apply if your total income is above the basic exemption limit.
• Your receipts are above the limit. Above Rs 50 lakh, or Rs 75 lakh with low cash receipts, the scheme is not available.
• Your work may not be a specified profession. Some freelance roles do not clearly fit the list. Content creation, digital marketing and some consulting work can fall into grey areas. If you are unsure, ask a Chartered Accountant before you file.

Advance tax is simpler too

Most taxpayers whose tax for the year, after TDS, is Rs 10,000 or more pay advance tax in four instalments: by 15 June, 15 September, 15 December and 15 March. If you use the presumptive scheme, you can pay the whole amount in one instalment by 15 March of the tax year.

Records worth keeping anyway

• Invoices you raise to clients.
• Bank statements showing payments received.
• Foreign inward remittance advice or platform payout statements for overseas clients.
• Your Annual Information Statement (AIS) and Form 26AS, to match receipts and TDS.

Try our freelancer tax planner to compare the presumptive and regular methods with your own figures.