Section 44ADA is a tax shortcut for professionals. If you earn up to ₹50 lakh a year from your profession, this section lets you pay tax on only 50% of that income—no books, no audits, just simple tax!
Who Can Use Section 44ADA?
It’s made for individuals like:
- Doctors 🩺
- Lawyers ⚖️
- Architects 🏛️
- Engineers 🏗️
- Accountants 📊
- Designers & Technical consultants 💻
- Any other profession listed in Section 44AA
Important Conditions:
- Your total gross receipts should be ₹50 lakh or less in a year.
- You must be a resident individual or HUF (not a company or LLP).
How It Works (Simple Terms)
Let’s say you earned ₹40 lakh as a freelance graphic designer.
- Under 44ADA:
- You declare 50% as profit = ₹20 lakh
- You pay tax only on ₹20 lakh
And the best part?
No need to maintain books of accounts
No tax audit required
No proof needed for expenses—it’s all assumed!
Key Features
| Feature | Details |
|---|---|
| Maximum Turnover | ₹50 lakh |
| Taxable Profit | 50% of turnover |
| Allowed Expenses | Automatically included in 50% estimate |
| Audit Required? | No (unless you declare less than 50%) |
| Eligible Entities | Individuals and HUFs |
Real-Life Example
- Radhika, a freelance interior designer, earns ₹30 lakh in FY 2024–25.
- Under 44ADA:
- ₹15 lakh (50%) is taxable income.
- She can reduce this by eligible deductions (like Section 80C).
When You Can’t Use 44ADA
- If your profession isn’t on the government’s “specified list.”
- If your annual income is over ₹50 lakh.
- If you are a company or LLP.
- If you want to declare less than 50% profit, you’ll need to:
- Maintain books of accounts, and
- Get a tax audit done.
Filing Tip
- Use ITR-4 (Sugam) form if you opt for 44ADA.
- Once you choose 44ADA, try to stay consistent for 5 years—if you switch back early, you may have to go without this benefit for the next 5 years.
Why It’s Helpful
- Great for freelancers and consultants who don’t have many expenses to claim.
- Reduces tax stress and paperwork.
- Saves on CA fees and time!
