Section 58 of the Income-tax Act, 2025 gives presumptive taxation in one table: 6% of receipts through banking or online modes plus 8% of the rest for business up to ₹2 crore, or ₹3 crore where cash receipts are within 5%, and 50% of gross receipts for specified professions up to ₹50 lakh, or ₹75 lakh on the same cash test.
What section 58 does
Section 58 is the single presumptive provision — replacing sections 44AD, 44ADA and 44AE of the Income-tax Act, 1961 with one section and one table. Instead of choosing between three sections, you find your row.
The business limb is the most used. Turnover must not exceed ₹2 crore, or ₹3 crore where cash receipts do not exceed 5% of total turnover or gross receipts. Income is the aggregate of 6% of receipts through specified banking or online mode and 8% of the balance — or the profit actually earned, whichever is higher.
For a specified profession under section 62(4), the limit is ₹50 lakh, or ₹75 lakh on the same 5% cash test, and income is 50% of gross receipts or actual profit, whichever is higher. For goods carriages, the assessee must own not more than ten, with heavy goods vehicles computed at ₹1,000 per ton of gross vehicle weight.
The Income-tax Act, 2025 takes effect from 1 April 2026 and applies from tax year 2026-27. The Income-tax Act, 1961 continues to govern every year up to 31 March 2026, including assessments, appeals and penalties for those years, because of the repeal and savings provision in section 536. Figures quoted here are the amounts written into the Act as enacted (with the Gazette corrigenda of 3 September 2025); the annual Finance Act can change rates and thresholds.
Old Act and new Act, side by side
The table below shows what the Income-tax Act, 1961 did and where the same ground is covered in the Income-tax Act, 2025.
| Income-tax Act, 1961 | What it did | Income-tax Act, 2025 |
|---|---|---|
| 44AD | Presumptive income for small business at 8% / 6% | 58 — Table serial 1 |
| 44AE | Goods carriages, up to ten vehicles | 58 — Table serial 2 |
| 44ADA | Specified professions at 50% | 58 — Table serial 3 |
| 44AD(5) / 44ADA(4) | Books and audit where lower profit is claimed | 58(3) |
| 44AA | Books of account | 62 |
| 44AB | Tax audit | 63 |
| 211, proviso | Advance tax in a single instalment | 408(2) |
Section 58 sub-section by sub-section
Read this alongside the bare text — each heading below is a sub-section of the section as enacted.
Sub-section (1) — the override
The provisions of sections 26 to 54, to the extent contrary to this section, do not apply to the computation of profits of a specified business or profession under sub-section (2). The ordinary deduction machinery is switched off — which is the whole point of a presumptive scheme.
Serial 1 — business, and the ₹2 crore / ₹3 crore limits
Any business other than that in serial 2, carried on by an eligible assessee, where turnover does not exceed ₹2 crore, or does not exceed ₹3 crore where cash receipts do not exceed 5% of total turnover or gross receipts. Income is the aggregate of 6% of turnover received by specified banking or online mode during the tax year or before the section 263(1) due date, and 8% of the balance — or the profit actually earned, whichever is higher.
The timing point in the 6% limb
The 6% rate applies to amounts received by banking or online mode during the tax year or before the due date under section 263(1). A receivable collected through banking channels before the return due date therefore still qualifies for the lower rate — a planning point worth noting at year end.
Serial 2 — goods carriages
The business of plying, hiring or leasing goods carriages, where the assessee owns not more than ten goods carriages at any time during the tax year. Income is computed vehicle by vehicle, with a heavy goods vehicle taken at ₹1,000 per ton of gross vehicle weight and other vehicles at the rate the table specifies.
Serial 3 — specified professions
A specified profession referred to in section 62(4) — legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology or company secretary — carried on by a specified assessee, where gross receipts do not exceed ₹50 lakh, or ₹75 lakh where cash receipts do not exceed 5%. Income is 50% of gross receipts or the profit actually earned, whichever is higher.
Sub-section (3) — the cost of declaring less
An assessee who claims that the profits actually earned are lower than the presumptive figure, and whose total income exceeds the maximum amount not chargeable to tax, must (i) keep and maintain books under section 62, and (ii) get the accounts audited and furnish the report. Both conditions must be met — a taxpayer below the exemption limit is not pushed into audit.
Worked example
A trader in tax year 2026-27 with turnover of ₹2,60,00,000, of which ₹2,50,00,000 was received through banking channels and ₹10,00,000 in cash.
| Step | Working | Amount |
|---|---|---|
| Cash receipts as a percentage of turnover | ₹10,00,000 ÷ ₹2,60,00,000 | 3.85% — within 5% |
| Eligibility limit | Cash within 5%, so the ₹3 crore limit applies | Eligible |
| 6% on banked receipts | 6% × ₹2,50,00,000 | ₹15,00,000 |
| 8% on the balance | 8% × ₹10,00,000 | ₹80,000 |
| Presumptive income | Or actual profit, whichever is higher | ₹15,80,000 |
Had cash receipts been ₹20,00,000 — 7.7% of turnover — the ₹3 crore limit would not have applied, turnover would have exceeded the ₹2 crore threshold, and section 58 would not be available at all. The 5% cash test is therefore the gateway, not merely a rate difference.
A consultant with gross receipts of ₹68,00,000, all banked, would fall under serial 3 with the ₹75 lakh limit and declare 50% = ₹34,00,000.
Compliance checklist and due dates
- Compute cash receipts as a percentage of turnover first — it decides whether the ₹2 crore or ₹3 crore (₹50 lakh or ₹75 lakh) limit applies.
- Split turnover between amounts received by banking or online mode (6%) and the rest (8%).
- Collect receivables through banking channels before the section 263(1) due date to bring them into the 6% limb.
- Remember the presumptive figure is a floor: actual profit, if higher, must be declared.
- If declaring lower than presumptive and total income exceeds the exemption limit, prepare for books under section 62 and audit under section 63.
- Presumptive taxpayers pay advance tax in a single instalment by 15 March under section 408(2).
- For goods carriages, confirm the assessee owns not more than ten at any time during the year.
Common mistakes
- Assuming the ₹3 crore limit applies without testing the 5% cash condition.
- Applying 6% to all turnover. Only amounts received by banking or online mode qualify; the rest is at 8%.
- Declaring the presumptive figure when actual profit is higher — the table requires the higher of the two.
- Forgetting that both conditions in sub-section (3) must be met before books and audit are triggered.
- Treating professional presumptive taxation as available to any profession; serial 3 is confined to the specified professions in section 62(4).
This is an explanatory guide, not tax advice, and it does not reproduce the section in full. Read the bare text of the section before you rely on it, and check for later amendments, the Income-tax Rules made under the new Act, and CBDT circulars and notifications.
Related Guides
- Section 63 — tax audit limits and the specified date
- Section 62 — who must maintain books of account
- Chapter IV — computation of total income
- Income-tax Act 1961 vs 2025 — master comparison
- Section mapping cheat sheet: 1961 to 2025
Key Facts About Section 58 of Income
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
Which sections does section 58 replace?
Sections 44AD, 44ADA and 44AE of the Income-tax Act, 1961, consolidated into one section with a table.
What is the turnover limit for presumptive taxation?
₹2 crore, or ₹3 crore where cash receipts do not exceed 5% of total turnover or gross receipts — serial 1 of the section 58(2) table.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Section 58 of Income: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.