Whether depreciation deemed to have been allowed as per 44ADA should be reduced from Cost of Acquisition of Office Premises and the resulting WDV should be reduced from its Sale Consideration for Short Term Capital Gains calculation?
This is a common confusion among professionals and freelancers taxed under Section 44ADA. If you’re wondering whether the deemed depreciation under Section 44ADA impacts the cost of acquisition of your office premises for capital gains calculation—you’re not alone.
Here’s the short insight:
Under Section 44ADA, no separate deduction for depreciation is allowed, as the presumptive taxation scheme itself offers a flat rate deduction (50% of gross receipts) in lieu of all expenses, including depreciation. Hence, deemed depreciation is not to be adjusted against the cost of acquisition of capital assets like office premises for capital gains computation.
In simpler terms:
If you claim presumptive income under 44ADA, you do not reduce any deemed depreciation from the cost of your office premises while calculating Short Term Capital Gains. You continue to consider the original cost (plus any capital improvements) as your cost of acquisition, and deduct it from the sale consideration to compute the gain.
But here’s the catch — making even a small mistake in such calculations can trigger unwanted tax notices or penalties!
That’s why smart professionals use this 
Download Automatic Income Tax Calculator in Excel for F.Y. 2025-26 — Perfect for Freelancers & Professionals under 44ADA!
It’s specially designed for Government and Non-Government Employees, and comes with:
Auto calculation of Capital Gains
Built-in logic for 44ADA, 44AE, and 44AD
Pre-filled Form 10E
Salary Sheet + HRA Exemption + Arrears Relief under Section 89(1)
Fully automated Form 16 Part A & B
1 Like
So nice of you, Sir. Other readers too will be immensely benefited from your learned and expert views.