Section 44ADA: Complete Guide for Freelancers in 2025
Learn everything about presumptive taxation under Section 44ADA - eligibility, benefits, tax calculation, and how to file ITR for freelancers in India.
Table of Contents
1. What is Section 44ADA?
Section 44ADA is a presumptive taxation scheme introduced by the Indian government specifically for professionals and freelancers. Under this scheme, you can declare 50% of your gross receipts as taxable income, without needing to maintain detailed books of accounts.
💡 In simple terms: If you earn ₹20 lakhs, you only pay tax on ₹10 lakhs (50%), regardless of your actual expenses.
2. Who is Eligible for 44ADA?
You can use Section 44ADA if:
- You are a resident individual or partnership firm (not LLP)
- Your gross receipts are ≤ ₹75 lakhs per year (if digital receipts are >95%)
- Your gross receipts are ≤ ₹50 lakhs per year (if digital receipts are <95%)
- You are engaged in a specified profession
Specified Professions Include:
3. Benefits of Section 44ADA
📚 No Books Required
No need to maintain detailed accounting records
🔍 No Audit Required
Skip the expensive tax audit if you declare 50%+ as income
💰 Lower Tax Burden
If your actual expenses are less than 50%, you still only pay tax on 50%
📝 Simple ITR Filing
File ITR-4 (Sugam) - the simplest form for professionals
4. How to Calculate Tax Under 44ADA
5. Real Example
Rahul - Freelance Developer
* Without 44ADA, if Rahul had to show actual expenses of only ₹4L, he'd pay tax on ₹20L instead of ₹12L!
6. How to File ITR Under 44ADA
- Choose ITR-4 (Sugam) - This is the form for presumptive income
- Enter gross receipts - Total amount received from clients
- System auto-calculates 50% - Your presumptive income
- Add Chapter VI-A deductions - 80C, 80D, etc.
- Pay any remaining tax - After TDS adjustments
- Submit and e-verify - Using Aadhaar OTP
7. Frequently Asked Questions
Can I claim expenses under 44ADA?
No, the 50% presumptive income already accounts for all expenses. You cannot claim additional deductions for business expenses.
What if my actual profit is less than 50%?
You can opt out of 44ADA and maintain books, but then you'll need a tax audit if turnover exceeds ₹50L.
Can I use 44ADA if I also have salary income?
Yes! You can have salary income and still use 44ADA for your freelance income.
Is advance tax required under 44ADA?
Yes, you must pay 100% advance tax by March 15th in a single installment.
Calculate Your Tax Under 44ADA
Use our free tax calculator to see exactly how much you'll save