Section 44ADA: Cut Your Tax Bill by 50% Legally?

If you are a freelancer or self-employed professional earning under ₹75 lakh a year, Section 44ADA lets you declare just 50% of your income as taxable — no need to maintain complex account books.

Here's what happened: Section 44ADA is a presumptive taxation scheme where eligible professionals declare 50% of gross receipts as profit, without maintaining detailed books of accounts.. Eligible professionals include doctors, lawyers, architects, engineers, accountants, consultants, and interior designers with annual gross receipts up to ₹75 lakh.. Under this scheme, no separate deductions for business expenses are allowed — the 50% flat reduction itself covers all professional costs..

What you should do: Check if your profession is listed under Section 44ADA eligible categories on the Income Tax India website before filing your ITR this season.. Use ITR-4 (Sugam) form if you opt for 44ADA — it is simpler than ITR-3 and does not require a profit and loss statement or balance sheet.. Compare your actual expenses against the 50% presumptive deduction — if real expenses are higher, consult a CA before choosing this scheme as you cannot switch every year freely..

Once you opt out of Section 44ADA, you cannot re-enter the scheme for the next 5 years — so choose carefully, not just for this year's tax saving.