Pay “Zero” Tax on Professional Receipts of up to Rs.24 Lakhs

FM has proposed a revised tax slab under new tax regime that intends to decrease the tax burden. Now Pay “Zero” Tax on Professional Receipts of up to Rs.24 Lakhs.

Zero Tax on Professional Receipts

Reetu | Feb 5, 2025 |

Pay “Zero” Tax on Professional Receipts of up to Rs.24 Lakhs

Pay “Zero” Tax on Professional Receipts of up to Rs.24 Lakhs

Budget 2025 presented on 1st Feb made various changes to direct taxation. Finance Minister Nirmala Sitharaman has proposed a revised tax slab under new tax regime that intends to decrease the tax burden.

So, what will be the tax applicability on professional income up to Rs.24 Lakh?

Section 44ADA – Presumptive Tax for Professionals

Section 44ADA outlines a presumptive taxation scheme for professionals such as doctors, engineers, and lawyers. As an alternative to traditional tax computation, they can pay a flat rate of 50% of their gross receipts with no deductions. Paying tax on 50% of gross receipts reduces many professionals’ taxable income.

So let say, if professional income is Rs.24 Lakh and only 50% book profit to be shown, then taxable income reduced to Rs.12 Lakh. After which you get the rebate benefit.

Let’s understand it in other way –

If we take an example of above mentioned professional income i.e. Rs.24 Lakh and only 50% book profit to be shown, then taxable income reduced to Rs.12 Lakh.

As per new tax regime the new tax rate slab are:

0-4L0%
4-8L5%
8-12L10%
12-16L15%
16-20L20%
20-24L25%
Above 24L30%

Example: Taxable income = Rs.12 Lakh

Calculate tax liability

Income 4L – 8L = 4,00,000*5% = Rs.20,000

Income 8L -12L = 4,00,000*10% = Rs.40,000

Total Tax Liability = Rs.60,000

The total tax liability comes to Rs.60,000, but after deducting the rebate amount i.e. Rs.60,000 under new tax regime. The tax liability becomes ‘nil’ or ‘zero’.

Assumption: No Other Income apart from Professional Receipts.

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