Presumptive income sounds simple: apply a fixed percentage to turnover or receipts and pay tax on the resulting income.
But the first question is not “What percentage applies?”
It is “Am I actually eligible for presumptive taxation?”
From 1 April 2026, the Income-tax Act, 2025 replaced the 1961 Act and consolidated the familiar Section 44AD, 44ADA and 44AE schemes into Section 58.
But the first question is not “What percentage applies?”
It is “Am I actually eligible for presumptive taxation?”
From 1 April 2026, the Income-tax Act, 2025 replaced the 1961 Act and consolidated the familiar Section 44AD, 44ADA and 44AE schemes into Section 58.
TL;DR
- Under the Income-tax Act, 2025, resident presumptive-tax schemes are now consolidated in Section 58.
- Eligible businesses can generally use 8%, or 6% for qualifying banking/online receipts, subject to the ₹2 crore/₹3 crore turnover limits.
- Specified professionals can use 50% of gross receipts, subject to the ₹50 lakh/₹75 lakh limits.
- The higher ₹3 crore and ₹75 lakh limits apply only when cash receipts do not exceed 5% of turnover or gross receipts.
1. Are you running a business or a specified profession?
Section 58 treats the two differently.
Eligible business
The business presumptive scheme is available to eligible resident:
- individuals
- Hindu Undivided Families (HUFs)
- partnership firms other than LLPs
Key exclusions include:
- agency businesses
- commission or brokerage income
- specified professions
- businesses outside the prescribed eligibility conditions
Specified profession
The professional presumptive scheme applies to resident individuals and partnership firms other than LLPs carrying on a profession listed in Section 62(4), including:
- legal
- medical
- engineering
- architectural
- accountancy
- technical consultancy
- interior decoration
- information technology
- company secretary
2. Are you within the turnover or receipts limit?
The ordinary and enhanced limits are:
| Category | Standard limit | Enhanced limit if cash receipts ≤5% |
|---|---|---|
| Eligible business | ₹2 crore | ₹3 crore |
| Specified profession | ₹50 lakh | ₹75 lakh |
For the enhanced limit, cash receipts must not exceed 5% of total turnover or gross receipts for the tax year.
A non-account-payee cheque or bank draft is treated as cash for this test.
Digital collections help, but eligibility still depends on total annual receipts.
3. What percentage of income is presumed?
For eligible businesses
Section 58 generally computes presumptive business income as:
- 6% of turnover or gross receipts received through specified banking or online modes within the permitted timeline
- 8% of the remaining turnover or gross receipts
Example:
A business has ₹1 crore of turnover:
- ₹90 lakh received through qualifying digital/banking modes
- ₹10 lakh received in cash
Presumptive income would be:
- 6% of ₹90 lakh = ₹5.4 lakh
- 8% of ₹10 lakh = ₹80,000
Total presumptive income = ₹6.2 lakh
For specified professionals
The presumptive income is 50% of gross receipts, or a higher amount claimed to have been actually earned.
Example:
A technical consultant has ₹60 lakh of gross receipts and cash receipts stay within the 5% condition.
The consultant can fall within the enhanced ₹75 lakh eligibility ceiling, and the presumptive income is ₹30 lakh.
4. What expenses can you claim separately?
Once income is computed under Section 58, ordinary business or professional deductions covered by the scheme are treated as already reflected in the presumptive amount.
You cannot calculate presumptive income and then separately deduct items such as:
- rent
- salaries
- software subscriptions
- travel
- depreciation
5. What if your actual profit is lower?
If you claim income below the prescribed presumptive amount and your total income exceeds the amount not chargeable to tax, Section 58 can require you to:
- maintain prescribed books and records
- get the accounts audited under Section 63
The trade-off is simpler compliance versus proving a lower actual profit where books and audit are required.
For eligible businesses, there is another important rule. If you use the business presumptive scheme and then stop declaring income under it within the following five tax years, a five-year lockout can apply under Section 58.
This lockout rule is tied to the eligible-business scheme, not the professional 50% scheme.
Presumptive vs regular taxation
| Presumptive taxation | Regular taxation | |
|---|---|---|
| Income calculation | Statutory presumptive method | Actual revenue less allowable expenses |
| Detailed expense claims | Generally not separate | Allowed subject to tax rules |
| Books/audit | Reduced in qualifying cases | Normal requirements apply |
| Best question to ask | Do I meet Section 58 conditions? | Can I substantiate actual income and expenses? |
Do not choose purely by comparing 6%, 8% or 50% with your rough profit margin. Eligibility, record-keeping, audit rules and the actual facts of the business all matter.
What about advance tax?
Taxpayers using the Section 58 presumptive scheme generally pay their entire advance-tax liability by 15 March of the relevant tax year.
This remains a useful planning benefit compared with the normal advance-tax instalment schedule.
Where PayGlocal fits for international earners
PayGlocal's Multi-Currency Accounts let businesses collect international payments through local receiving details across 33+ currencies from 180+ countries, with digital transaction records and automated FIRA.
These digital receipts can help keep cash receipts within the 5% condition, but PayGlocal usage does not itself guarantee Section 58 eligibility.
