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:

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.