Section 58 – Presumptive Taxation | Income-tax Act, 2025

Section 58 – Presumptive Taxation

Income-tax Act, 2025 | Comprehensive Summary
(Replacing Sections 44AD, 44ADA & 44AE of IT Act, 1961)

1. Business [Sl. No. 1 of Table u/s 58(2)]

Eligible Assessee

  • Resident Individual, HUF or Firm excluding LLP
  • Not engaged in commission, brokerage or agency business
  • Not carrying on specified profession under Section 62(4)
  • No deduction claimed under Section 141 or Chapter VIII-C

Turnover Limits

  • Up to ₹2 Crore under normal conditions
  • Up to ₹3 Crore where cash receipts do not exceed 5% of total turnover
  • Non-account payee cheque or draft shall be treated as cash receipt

Presumptive Income Rate

  • 6% of turnover received through banking or digital mode
  • 8% of turnover received through other modes
  • Higher actual profit, if earned, must be disclosed
5-Year Lock-in: Once opted, the scheme should continue for 5 consecutive years. If the assessee opts out, the scheme cannot be chosen again for the next 5 assessment years.
Audit Trigger: If declared income is lower than presumptive rate and total income exceeds the basic exemption limit, maintenance of books and tax audit become mandatory.

2. Goods Carriage Business [Sl. No. 2 of Table u/s 58(2)]

Eligible Assessee

  • Applicable to any person including Individual, HUF, Firm or Company
  • No residency restriction
  • Must not own more than 10 goods carriages during the year
  • Vehicle acquired on hire purchase or instalment treated as owned vehicle

Presumptive Income

  • Heavy Goods Vehicle exceeding 12,000 kg GVW → ₹1,000 per ton per month
  • Other Goods Vehicle → ₹7,500 per vehicle per month
  • Part of month considered as full month
  • Higher actual income must be disclosed if earned

Special Features

  • No 5-year lock-in condition
  • Books of account and audit provisions under Sections 62 & 63 not applicable
  • Gross receipts excluded for monetary limits under Sections 62 & 63
  • Partnership firms may separately claim salary and interest to partners subject to Section 35(e)

3. Specified Profession [Sl. No. 3 of Table u/s 58(2)]

Eligible Assessee

  • Resident Individual or Firm excluding LLP
  • Applicable to medical, legal, engineering, architecture, accountancy, technical consultancy, interior decoration and notified professions

Gross Receipts Limits

  • Up to ₹50 Lakhs under general condition
  • Up to ₹75 Lakhs where cash receipts do not exceed 5% of total receipts

Presumptive Income

  • 50% of gross receipts
  • Higher actual income, if earned, must be disclosed
Professionals can opt in or opt out freely. No 5-year lock-in is applicable.
Audit Trigger: If income declared is below 50% and total income exceeds the basic exemption limit, tax audit becomes applicable.

Common Provisions Applicable to All Categories

  • Depreciation deemed to be allowed and WDV adjusted accordingly
  • Separate expense deductions not allowed
  • Chapter VI-A deductions like 80C and 80D can still be claimed
  • Sections 26 to 54 overridden to the extent inconsistent
  • Higher actual income, if earned, must be disclosed

Advance Tax – Section 408(2)

  • All three categories under Section 58 must pay advance tax in one instalment
  • Due Date: 15th March of relevant tax year
  • 100% advance tax payable in single instalment
  • Failure may attract interest under Section 425

Quick Recall

Business

6% / 8% Presumptive Income
₹2 Crore / ₹3 Crore Limit
5-Year Lock-in Applicable

Transport

₹7,500 or ₹1,000 Per Ton
Maximum 10 Vehicles
No Lock-in

Profession

50% Presumptive Income
₹50L / ₹75L Limit
No Lock-in

Advance Tax

Single Instalment
Due by 15th March
Applicable to All Three Categories