Question 1

What is the difference between Section 44AD and 44ADA?

Accepted Answer

**Section 44AD** is for businesses (traders, shops) with turnover up to Rs 2 crore (Rs 3 crore if 95%+ digital). Deemed income is 8% of turnover (6% for digital receipts). **Section 44ADA** is for professionals (freelancers, consultants, doctors, CAs) with receipts up to Rs 50 lakh (Rs 75 lakh if 95%+ digital). Deemed income is 50%.

Question 2

When should I use presumptive taxation vs regular method?

Accepted Answer

Use **presumptive** when your actual expenses are less than the deemed percentage (8% for business, 50% for profession). Use **regular** when actual expenses exceed deemed profit - you can claim higher deductions. This calculator compares both methods to show which saves more tax.

Question 3

What are the benefits of presumptive taxation?

Accepted Answer

Major benefits include: **1)** No need to maintain books of accounts, **2)** No tax audit required, **3)** Simple tax computation, **4)** Single advance tax payment by March 15 (no quarterly payments), **5)** Reduced compliance burden. Cannot claim additional expenses beyond deemed percentage.

Question 4

What qualifies as 95% digital receipts for higher limits?

Accepted Answer

Digital receipts mean payments received through **banking channels** - bank transfers, UPI, credit/debit cards, RTGS, NEFT, cheques. Cash payments are non-digital. If 95%+ of your receipts are digital, you get enhanced limits: Rs 3 crore for 44AD and Rs 75 lakh for 44ADA.

Question 5

Am I classified as business or profession for tax purposes?

Accepted Answer

**Profession** includes: doctors, lawyers, CAs, architects, engineers, interior decorators, writers, and other specified professions requiring specialized knowledge. Content creators typically qualify as professionals. **Business** includes: trading, manufacturing, services not classified as profession. If unsure, consult a [CA](/book-appointment).

Business vs Professional (44AD vs 44ADA)

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