Presumptive Taxation under section 58 (Table: Sl. No. 3) of the Income-tax Act, 2025 (section 44ADA of the 1961 Act) explained: this guide covers what Section 58 Presumptive Taxation means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
1. Who Can Use Section 58?
Section 58 of ITA 2025 provides simplified presumptive taxation for individuals and partnership firms in specified professions with gross receipts not exceeding Rs 50 lakh (Rs 75 lakh where cash receipts do not exceed 5% of gross receipts). Specified professions: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, information technology and company secretary, plus any other profession notified by the Board.
2. How It Works
- Declare 50% of gross professional receipts as net income
- All expenses — rent, staff, equipment, subscriptions, travel — are deemed covered in the remaining 50%
- No books of accounts required
- No tax audit if you declare at least 50% (within the receipts limit)
- File ITR-4 (Sugam) — the simplest ITR form
- Advance tax: single instalment by 15 March
3. Computation Example
Illustrative only. Advocate Priya has receipts of Rs 48 lakh in Tax Year 2026-27. Under Section 58:
- Presumptive income: Rs 48L × 50% = Rs 24L
- Less standard deduction (available): Rs 75,000
- Less Section 123 investments (old regime): Rs 1,50,000
- Net taxable income: Rs 21.75L
- Tax (new regime on Rs 24L before deductions, since new regime doesnt allow Section 123): approximately Rs 2,70,000
4. When Opting Out Makes Sense
If actual profit margin is below 50% — because expenses are genuinely high — opting out of Section 58 can reduce tax. For example, a specialist doctor with expensive clinic rent, staff, and equipment may have actual profits of only 35%. Opting out requires: full books of accounts; tax audit under Section 63 where Section 58(3) applies (profit claimed below 50% and total income above the basic exemption limit). The compliance cost must be weighed against the tax saving.
5. Personal Deductions Still Available
Even under Section 58, the professional can claim personal investment deductions:
- Old regime: Section 123 (Rs 1.5L), Section 124(3) NPS extra (Rs 50K), Section 126 health insurance, home loan interest
- New regime: Standard deduction Rs 75,000, employer NPS Section 124(1)
- Section 156 rebate: if total income (after deductions) is up to Rs 12L — zero tax
6. Section 58 for Partnership Firms
Partnership firms in eligible professions can also use Section 58 — declaring 50% of receipts as firm income. The firm then distributes to partners. Partners get their share of firm income (exempt in their hands since firm already paid tax) and any separately declared interest/remuneration from the firm. The firm must file ITR-5, not ITR-4.
7. Why TaxClue
Section 58 is ideal for solo professionals and small professional firms — dramatically cutting compliance costs. TaxClue advises on eligibility, advance tax, and ITR-4 filing. Contact us for professional tax planning under ITA 2025.