Presumptive Taxation Scheme: Budget 2023

Thanks you very much for your reply.

It seems there is something wrong with answer number 5.

You are saying “Also the code selected is correct but the section 44AD is not correct.”

Did you mean that the code 21008 is not under 44ad or ?

As I am also outsourcing some of my work I do want to continue to use 44ad only. Could you please suggest code from 44ad for my specific biz?


Hi @love4u_now,

So the correct Section you can go for is 44ADA and there are specific codes for the same. You can check which code is applicable to you by referring this article.

Hope this clarifies!


is GST registration mandatory for section 44ADA, if the income exceeds 20+L.

Nature of Job - Technical Consulting


Hi @Franklin_Raj

GST registration is mandatory if the turnover exceeds ₹20 lakhs.
You can then also opt for the presumptive scheme u/s 44ADA and declare 50% of your turnover for income tax purposes.

Hi Niyati,

It is clear to me now the difference. I am giving service about design and Research & Development to a foreign client. I used to file tax by selecting code 16005 (44ada).
If I opt for 15003 (44ad) then will I be asked for proof about my services from respective government department? or what impact it could have? Thanks

Hi @Ishwar,

Since you were filing by selecting 44ADA which requires to show 50% income and now under 44AD the income you are required to declare is 6/8% which is on the lower side. The department may ask you to provide proof about your services whether they fall under 16005(44ADA) or 15003(44AD).

Hope this clarifies!

Hi @CA_Niyati_Mistry

My Professional income for FY 22-23 is coming around 54L ( no cash ), can I still claim benefits under 44ADA as there is a limit is increasing to 75L from FY 23-24. If not what is the best solution for me as it is marginally above the current limit of 50L. TIA.

Hi @Keshav,

For the FY 2022-23, the limit for opting under Presumptive Taxation scheme is ₹50 lakhs. Since your receipts is more than ₹50 Lakhs you cannot opt for the same.

For the FY 2023-24, the enhance limit of ₹75 Lakhs will be applicable and then you can opt for Presumptive Taxation scheme.

Hope this helps!

Hi. You have an amazing thraed here!

I work as a freelancer (software engg) and receive all my earnings from a friend directly in my bank account. My net income is around 8L (2% of which is from interest and dividends).
So if I mention 60% profits in presumptive taxation scheme, do I have to pay taxes on the remain 40% (3.8L) or do I go tax free since it is under 5L? I also have 1L invested in schemes under 80C.

Hi @KarimB,

Under presumptive taxation you can show 60% profits, you don’t have to pay taxes on remaining 40%. Presumptive taxation is only for business income, dividend and interest are not to be included here.

If your Net Total Income (Gross Total Income- Deductions u/s 80C, 80D,etc.) is less than ₹5 Lakhs, your tax liability will be Nil.

Hope this clarifies!

I am sorry I think I got it wrong here. If I show a profit of 60%, I a liable to pay taxes on that and not on the 40%.
And the gross total income would be the 60% profit (4.8L) + other income such as dividends and interests. Is my undersranding correct?

Hi @KarimB,

Yes, if you show a profit 60%, then you will have to pay taxes on that only and not on 40%.
Also, your gross total income will be 60% profit and other incomes like dividend, interest, etc.

Hope this clarifies!

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just a naive query ;

even though the actual profit is say e.g.: 80% . BUT . i chose to show 60% . thus. i pay tax on what i show in the presumptive scheme !

is it ok ?


Ideally, under presumptive taxation scheme, profit at 6%/8% or actual whichever is higher is declared and taxes are paid on the same.

Hope this clarifies!

yes . you are right . but . there is a loophole in this . as per the rule : under the

i am not required to maintain any books records . so . who will come to know and how will the taxman come to know anything except what is mentioned in the AIS and what i show/declare ?

am i right ?

Yes, made it very clear. I genuinely appreciate the help. Thankyou

I have a query. If freelance income is < 50 lacs but combined salary + freelance income exceeds 50 lacs, will presumptive taxation apply? Which ITR has to be filed (FY 2022-2023)?

i am a Marketing executive and Salaried. Annual Salary in the Range of 25-35L

Additionally i do F&O Trading and as per records the turnover is 291032 and PL is around 50K.

does presumptive taxation is revelant in this Scenario ; Also in my the the Tax Audit is not applicable.

please provide Clarity

Hi @chintasunny

A presumptive taxation scheme can be opted for if you have income under the head “Income from Business & Profession.” So, you will be able to opt for the presumptive scheme for your freelance income if it does not exceed 50 lakhs/75 lakhs. For salary income, it shall be taxed regularly. The total tax shall be computed as per the regime chosen by you.
ITR 3 will be applicable for FY 2022-23.

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Hi @TK07

A presumptive taxation scheme can be opted for if you have income under the head “Income from Business & Profession.” FnO trading is considered a business income and the turnover is less than the limit of 2 crore/3 crore, so you can opt for the presumptive scheme. Also, the profit is more than 6% of the turnover, so a tax audit will not be applicable.