Presumptive taxation for professionals
If you earn from a profession such as software development, design, consulting, law, medicine, architecture, writing or other freelance work, you can choose presumptive taxation. Instead of tracking every expense, you declare 50% of your gross receipts as profit and pay tax on that. You don't need to maintain detailed books or get an audit, as long as your receipts stay within the limit.
The limit is ₹75 lakh if cash receipts are no more than 5% of the total, and ₹50 lakh otherwise. This scheme was known as section 44ADA under the old Act; the Income-tax Act, 2025 kept it under a new section number.
Profit = 50% of gross receipts (or more, if you choose)
Tax = slab tax on (profit + other income − allowed deductions)Worked example
Advance tax: pay as you earn
Freelancers don't have an employer deducting tax, so if your yearly tax exceeds ₹10,000 you must pay advance tax in instalments. The results table shows the cumulative amounts due by each date. Under presumptive taxation, you may instead pay the whole amount by 15 March. Missing deadlines leads to interest charges.
Presumptive or actual profit?
- If your real expenses are below 50% of receipts (common for software, writing and consulting), presumptive taxation usually means less tax and far less paperwork.
- If expenses are above 50%, declaring actual profit with proper books can lower your tax.
- Clients deduct TDS (usually 10%) on professional fees; claim it against your final tax when filing.
GST for freelancers
You need GST registration once your receipts cross ₹20 lakh a year (₹10 lakh in some special-category states). Exports of services to foreign clients are zero-rated, but registration may still be needed. Use the GST calculator and the free GST invoice generator for billing.
Frequently asked questions
Can freelancers use the new tax regime?
Yes. But once you have business or professional income, you can switch back to the old regime from the new one only once.
Do I need a CA for presumptive taxation?
Not necessarily. Many freelancers file ITR-4 themselves. If your case is complex or you exceed the limits, a CA helps.
Is TDS deducted on freelance income?
Indian clients usually deduct TDS at 10% on professional or technical fees above the threshold. It counts toward your final tax.
Official references: Income Tax Department · GST portal