44ADA – TAX VIC

Is 44ADA Dead? What has changed in new income tax act for the good old 44ADA

TAXVIC — Thu, 19 Feb 2026 06:35:51 +0000

What Section 58 (Income Tax Act 2025) Really Means for Freelancers

If you’re a freelancer, consultant, creator, designer, coach, CA, lawyer- you’ve probably loved 44ADA.

Declare 50%.
Skip complicated expense tracking.
Avoid audit stress (mostly).
Life was simple.

But from April 1, 2026, things shift under the Income Tax Act, 2025.

44ADA becomes Section 58.
And no — it’s not just a new number.
There’s a mindset change in the law.

Let’s break it down without tax-jargon headache.

The Big Shift: It’s About You, Not Just Your Income

Earlier, the thinking was:

“If this income qualifies, I can use 44ADA.”

Now the thinking is:

“If I earn certain types of income at all, I may lose eligibility completely.”

That’s the shift.

Before → Income-based view
Now → Person-based eligibility

Who Should Worry?

If you are a “pure” professional — meaning:

Only professional fees
No brokerage
No commission
No agency income

You’re mostly fine.

But if you earn:

Affiliate commission
Brokerage
Deal-based success fees
Referral commissions
Agency-style income

Even a small amount…

You may become ineligible for Section 58 entirely.

Yes. Entirely.

Real Example

You’re:

A marketing consultant earning ₹40 lakh in professional fees
Plus ₹4 lakh affiliate commission

Earlier mindset:

“Professional income under presumptive, commission separately.”

New rule vibe:

That commission income can push you out of Section 58 eligibility.

Meaning:

Full books.
Normal computation.
Possible audit if thresholds cross.

What About the 50% Rule?

Here’s another reality check.

Section 58 continues the 50% structure.

But now it’s very clear:

You must declare 50% of gross receipts
OR your actual profit — whichever is higher.

So if your real margin is 70%
And you keep declaring 50% every year…

In today’s AIS + data-matching world?

Risky.

The law looks similar.
The tech behind it is much sharper.

Threshold Limits

Still around:

₹50 lakh turnover limit
Can extend to ₹75 lakh if cash receipts are within 5%

So digital freelancers are generally safe on threshold.

The issue isn’t turnover.

The issue is income type.

Can You Declare Less Than 50%?

Technically yes.

But then:

You must maintain books
Audit may apply if income crosses exemption limit

So the simplicity disappears.

Another Silent Change: Less Adjustment Flexibility

Under Section 58, the presumptive income is treated more rigidly.

You cannot:

Reduce further business expenses
Adjust business losses freely
Play deduction games on top of presumptive base

It’s cleaner.
But less flexible.

Who Still Benefits?

Section 58 is great for:

Doctors
Lawyers
Designers
Independent consultants
Pure service professionals

As long as income = fee-based only.

Who Needs to Re-Plan?

You need to rethink if you are:

Affiliate marketers
Commission-based consultants
Hybrid advisors
Real estate consultants
Deal-closure professionals

Basically anyone with mixed revenue streams.

The Bigger Picture

The new law is not increasing tax rates.

It is tightening eligibility boundaries.

It’s saying:

“If you want simple presumptive taxation, keep your structure clean.”

Mix too many revenue types?

You move into proper bookkeeping mode.

Is 44ADA dead?

Not really.

But it’s no longer a casual default option.

Under Section 58 of the Income Tax Act 2025:

Pure professionals → smoother compliance
Hybrid earners → time to restructure

If you’re a freelancer or consultant, this is the right time to review your income model before April 2026.

Because in the new tax world:

Clarity wins.
Structure matters.
And “I didn’t know” won’t save you.

Tax Vic is a platform for self-employed individuals. Say hi and let’s work together.

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Sold a Property? Here’s How to Report Capital Gains (or Losses) in Your ITR

TAXVIC — Sat, 31 May 2025 07:37:10 +0000

Selling a residential or commercial property is a big financial event—and it often triggers a capital gains tax liability. Whether you’ve made a profit or loss, the Income Tax Department expects you to report it in your Income Tax Return (ITR) accurately.

In this blog, we’ll walk you through the types of capital gains, how to compute them, how to claim exemptions, and most importantly—how to report them correctly in your ITR (AY 2025–26).

1. Understand the Type of Capital Gain: Short-Term or Long-Term

Your capital gain depends on how long you held the property before selling:

Short-Term Capital Gain (STCG):

If property is sold within 24 months of purchase.

Taxed at your slab rate (as regular income).

Long-Term Capital Gain (LTCG):

If sold after 24 months.

Taxed at 20% with indexation benefit.

You may be eligible for exemptions under Section 54, 54F, etc.

Indexation means adjusting the purchase price for inflation, thereby reducing your taxable gain.

2. How to Calculate Capital Gains on Sale of Property

A. For LTCG:

Capital Gain = Sale Price – Indexed Cost of Acquisition – Indexed Cost of Improvement – Transfer Expenses

Example:

Purchase price in 2010 = ₹30 lakhs

Indexed cost (using CII) = ₹60 lakhs

Sale price in 2024 = ₹90 lakhs

Capital gain = ₹90L – ₹60L = ₹30 lakhs

B. For STCG:

No indexation is allowed. Simply subtract original cost and expenses from sale price.

3. ITR Form to Be Used

ITR-2 – If you have salary and capital gains income (no business income)

ITR-3 – If you also have business or freelance income

ITR-1 and ITR-4 cannot be used if you have capital gains.

4. Where to Report in ITR

You must fill the “Schedule CG” (Capital Gains Schedule) in the return:

Choose type of asset (land/building)

Provide:

Date of acquisition and sale

Sale consideration

Indexed cost of acquisition/improvement

Capital gains computation

Mention any exemption claimed under relevant sections

5. Claiming Exemption from LTCG Tax

You can save tax by reinvesting the capital gains:

a. Section 54 – Purchase of another residential property

Must buy new house within 1 year before or 2 years after, or construct within 3 years.

Exemption available only if the sold asset was also a residential house.

b. Section 54F – Sale of any asset other than residential property

Applicable when entire net sale proceeds are invested in a house.

If you invest partially, exemption is proportionate.

c. Section 54EC – Bonds

Invest in NHAI/REC capital gains bonds within 6 months of sale.

Max ₹50 lakh investment; lock-in period is 5 years.

To claim these exemptions, you must report them clearly in the ITR and ideally invest before due date of filing return.

6. What If You Incurred a Capital Loss?

You can carry forward capital losses for 8 assessment years, but only if you file your ITR before the due date.

Short-term capital loss can be set off against both STCG and LTCG.

Long-term capital loss can be set off only against LTCG.

Missing the ITR deadline = losing your right to carry forward losses.

7. Common Mistakes to Avoid

Reporting sale amount without deducting brokerage or registration charges

Using ITR-1 or ITR-4 instead of ITR-2/3

Not applying indexation properly

Not reporting the sale at all—even if no capital gain is earned

Ignoring reinvestment timelines and conditions for exemption

8. What If You Missed Reporting the Sale in Past Years?

If the Income Tax Department finds property sale data in your AIS/Form 26AS or via registry data, you could receive:

Notice under Section 148 (Reassessment of escaped income)

Penalty and interest for under-reporting

Opportunity to file Updated Return (u/s 139(8A)) voluntarily and correct the error

Conclusion

Selling property is not just a financial milestone—it’s also a tax event. By reporting it properly, calculating capital gains carefully, and taking full advantage of available exemptions, you can minimize your tax burden and stay compliant.

Make sure to file using the correct ITR form, report even losses, and keep documentary proofs like purchase deeds, cost receipts, registry records, and proof of reinvestment.

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Section 44ADA: Presumptive Tax Scheme for Professionals in India

TAXVIC — Thu, 16 Nov 2023 08:49:57 +0000

Income tax rules in India include a number of features designed to make the taxes procedure easier for different types of taxpayers. Section 44ADA of the Income Tax Act, which is expressly tailored for certain specified professionals, is one such provision. This section describes a presumptive taxation approach designed to reduce the burden on professionals when determining their taxable income. In this article, we will go over the specifics of Section 44ADA, such as qualifying criteria, presumptive income computation, benefits, and ramifications.

What is Section 44ADA of the Income Tax Act?

Section 44ADA of the Income Tax Act is a specific provision that permits some professionals to compute their income on a presumptive basis. Instead of keeping thorough books of accounts, qualifying professionals can report a predetermined percentage of their gross revenues as income for tax reasons. 44ADA can be adopted only if your total receipts during a financial year is below 75 lacs.

Eligibility for Section 44ADA

Section 44ADA is available to professionals working in particular sectors. The following categories are eligible:

Legal Professionals: This scheme is available to advocates, solicitors, and other legal practitioners.
Medical Professionals: This section applies to doctors, dentists, and other medical practitioners.
Engineering or Architectural Professionals: Engineers and architects are covered by Section 44ADA.
Accounting Professionals: Chartered accountants and accountants in practice.
Technical Consultancy Professionals: Professionals who offer technical, architectural, engineering, or other related services.

Presumptive Income Calculation under Section 44ADA

Section 44ADA calculates presumptive income as a percentage of gross receipts. The presumptive income for professionals covered by this clause is 50% of total gross receipts. What it means is whatever is your receipts during the year, 50% will be considered as your net profit and taxes would be calculated on that 50% portion. Do not confuse gst filing with adopting 44ADA under income tax, the both laws are different, do not overlap.Only individuals can adopt for 44ADA.

For Example: Assume a software engineer earns INR 10,00,000 in total gross earnings in a fiscal year. According to Section 44ADA, their taxable income will be INR 5,00,000 (50% of INR 10,00,000).

Benefits of Section 44ADA

Simplified Compliance: One of the key advantages is that the compliance load is decreased. Professionals do not need to keep detailed records of accounts, which simplifies tax filing.
Presumptive Rate: The presumptive rate of 50% is considered appropriate and aids in the avoidance of income calculation conflicts.

When must an assessee keep books and have their finances audited?

Professionals who choose Section 44ADA are not required to keep regular books of accounts or to submit to a tax audit. They must, however, file an income tax return if their total income exceeds the maximum amount not chargeable to tax (currently INR 2.5 lakh for persons under the age of 60). In such circumstances, businesses should keep basic records of gross receipts and costs for future reference.

Implications of choosing Section 44ADA

While Section 44ADA has various benefits, professionals should carefully consider its ramifications before implementing it:

Higher Tax Liability: In some circumstances, the presumptive rate of 50% may result in a higher taxable income than actual income.
Ineligible Deductions: Professionals who choose this scheme are not eligible for deductions under Sections 10A, 10AA, 10B, 10BA, or Chapter VI-A.
No Carry Forward of Losses: If this scheme is chosen, losses cannot be carried forward or offset against future income.
No claim of depreciation, expenses etc.: since the whole idea of 44ADA is to “presume” (which is why it is called presumptive taxation), your expenses would be irrelevant as you are given the flexibility to consider 50% as your income straightaway. So do not get confused about claiming expenses when you are going to adopt for 44ADA.

Conclusion

Section 44ADA of the Income Tax Act is a helpful provision in India for qualified professionals. It streamlines tax compliance, alleviates the stress of keeping thorough books of accounts, and eliminates the necessity for a tax audit. However, before choosing for this presumptive taxation structure, professionals should carefully analyze their unique circumstances, income levels, and deductions. To make an informed decision and ensure compliance with tax legislation, it is best to consult a tax specialist.

Need Professional Guidance: info@taxvic.com

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TAXVIC

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