Presumptive Taxation under New Income Tax Act-2025:

Presumptive Taxation under New Income Tax Act-2025 INTRODUCTION As under Old Income Tax Act 1961, Section 44AD/ADA/AE was dealing with the presumptive taxation but now onwards, i.e., from Tax Year 26-27 onwards the Income Tax act 2025 will be in effect So, the question arises, what are the provisions for presumptive taxation & how will it be dealt with the new act? Let’s decode it There are two sections dealing with presumptive taxation under the new act

1. Section 58 (Presumptive for Residents)
2. Section 61 (Presumptive for Non-residents)

Let’s check out one by one Section 58: Special provision for computing profits and gains of business or profession on presumptive basis in case of certain residents. (Similar to section 44AD/ADA/AE under IT ACT 1961)

Sl. No.	Category of Business / Profession	Turnover / Gross Receipts Limit	Assessee	How Profit is Computed (Manner of Computation)
1	Any Business (General)[Sl. No. 1]	Option A: Up to ₹2 croreOption B: Up to ₹3 crore (only if cash receipts ≤ 5%)	Eligible assessee.	Choose HIGHER of: ▸ A) Aggregate of: • 6% of turnover received via banking / online mode • 8% of remaining turnover (received by other modes) ▸ B) Actual profit earned (if higher than above)
2	Goods Carriage Business (Plying / Hiring /Leasing)[Sl. No. 2]	No turnover limit specified for this category	An assessee, who owns not more than ten goods carriages at any time during the tax year	Choose HIGHER of: ▸ A) Fixed rate per vehicle: HEAVY GOODS VEHICLE (GVW > 12,000 kg): ₹1,000 per TON of GVW or unladen weight × months owned in year OTHER GOODS VEHICLE (GVW ≤ 12,000 kg): ₹7,500 per vehicle × months owned in year (part-month = full month) ▸ B) Actual profit earned (if higher than above)
3	Specified Profession(e.g., Doctors, Lawyers, CAs, Engineers, Architects, etc.)[Sl. No. 3 & Section 62(4)]	Option A: Up to ₹50 lakhOption B: Up to ₹75 lakh (only if cash receipts ≤ 5%)	Specified assessee.	Choose HIGHER of: ▸ A) 50% of gross receipts ▸ B) Actual profit earned (if higher than above)

• Eligible Assessee means an individual, a Hindu undivided family, or a firm other than a limited liability partnership, who is resident in India, and who:

(i) has not claimed any deduction under Chapter VIII-C for the relevant tax year; (ii) does not carry on specified profession as defined in section 62(4) (iii) does not earn any income in the nature of commission or broke-rage (iv) does not carry on any agency business

• Specified Assessee means an individual or a firm, other than a limited liability partnership, who is a resident in India;

POINTS TO KEEP IN MIND:

• Any loss, allowance or deduction allowable under the provisions of this Act, shall not be allowed against the income computed in the manner specified above.
• If an Eligible Assessee opt in but then declare lower profit in any of the next 5 years then it will be banned from using Section 58 for 5 years after that year & once its break the assessee will have to maintain the Books of Accounts us 62 & will have to get audited us 63 of the act.
• If the transport business is a firm, salary and interest paid to partners can still be deducted, subject to Section 35(e) limits.
• Cheques or bank drafts that are not account payee are treated as cash receipts- they won't help you qualify for the ₹3 crore / ₹75 lakh limit.

Section: 61 Special provision for computation of income on presumptive basis in respect of certain business activities of certain non-residents. (Similar to section 44BB/44BBA/44BBB/44BBC/44BBD under IT ACT 1961)

SL. No.	Type of Business	Who it Applies To	How Income (Profit) is Calculated
1	Running / Operating Ships (Not cruise ships)	Non-Resident	7.5% of (A + B) Where: A = Money received or receivable for carrying passengers, livestock, mail, or goods shipped from any Indian port (whether collected in India or abroad) B = Money received or receivable in India for carrying passengers, livestock, mail, or goods shipped from a port outside India (Both A and B include demurrage, handling, and similar charges)
2	Running / Operating Cruise Ships (Subject to conditions as prescribed)	Non-Resident	20% of (A + B) Where: A = Money paid or payable for carriage of passengers B = Money received or deemed to be received for carriage of passengers
3	Running / Operating Aircraft	Non-Resident	5% of (A + B) Where: A = Money paid or payable for carrying passengers, livestock, mail, or goods from any place in India (whether collected in India or abroad) B = Money received or deemed to be received in India for carrying passengers, livestock, mail, or goods from a place outside India
4	Civil Construction, Installation or Testing of Plant/Machinery In connection with a Turnkey Power Project approved by Central Government	Foreign Company	10% of the amount received or receivable This includes amounts paid or payable in India or abroad for carrying out the civil construction, installation, testing, or commissioning work.
5	Services for Mineral Oil Exploration or Production (Including supply of plant/machinery on hire)	Non-Resident	10% of (A + B) Where: A = Money paid or payable (in or outside India) for services/facilities or plant/machinery on hire used in prospecting, extraction, or production of mineral oils in India B = Money received or deemed to be received in India for similar services related to mineral oils outside India
6	Services or Technology for Electronics Manufacturing Provided to a Resident Company setting up an electronics manufacturing unit in India	Non-Resident	25% of (A + B) Where: A = Amount paid or payable to the non-resident for providing the services or technology B = Amount received or deemed to be received by the non-resident for providing the services or technology

POINTS TO KEEP IN MIND:

• No deductions for losses or expenses are allowed against income computed as above
• If an Assessee believes actual profits are lower than the presumptive amount, they may claim lower profits by maintaining proper books of account and getting them audited.
• The word 'plant' includes ships, aircraft, vehicles, drilling units, scientific apparatuses and equipment’s used for the purposes of the specified business. (Sl. No 5)
• The resident company must be operating under a scheme notified by the Central Government (Ministry of Electronics & IT) and must meet the prescribed conditions. (Sl. No 6)