Section 44ADA Sweet Spot

What is This Hack?

Earn up to ₹24 lakh with 50% deemed income (₹12 lakh), use ₹75,000 standard deduction in new regime for minimal tax and zero audit requirement

How It Works

Section 44ADA allows professionals (doctors, CAs, lawyers, freelancers, consultants) to declare only 50% of gross receipts as taxable income without maintaining books of accounts. Combined with the new tax regime's ₹75,000 standard deduction and ₹7 lakh basic exemption, you can earn up to ₹24 lakh gross with minimal tax. No audit required if you stay within ₹75 lakh turnover (₹50 lakh if less than 95% digital receipts). This is perfect for freelancers who want simplified taxation without expense tracking hassles.

Step-by-Step Implementation

Verify Eligibility

Ensure you're a specified professional: doctor, engineer, CA, architect, lawyer, consultant, or freelancer providing professional services. Not applicable to business income.

Maintain 95%+ Digital Receipts

Receive at least 95% of payments via UPI, net banking, or cheques to qualify for ₹75L threshold. Below 95% digital = ₹50L threshold only.

Calculate Deemed Income

Your taxable income = 50% of gross receipts. E.g., if you earn ₹24 lakh, only ₹12 lakh is taxable.

Choose New Tax Regime

Opt for new regime to get ₹75,000 standard deduction. This reduces taxable income to ₹11.25L (₹12L - ₹75K).

Pay Advance Tax by March 15

Unlike others who pay quarterly, 44ADA allows single advance tax payment by March 15. No interest penalty.

File ITR-4 (Sugam)

Simple ITR form for presumptive income. No need to submit P&L, balance sheet, or detailed expenses. Just declare gross receipts.

Real Example: Freelance Developer

Situation

Priya is a freelance web developer earning ₹20 lakh annually from international clients. All receipts via Wise (digital).

Without This Hack

Regular taxation: Must maintain books, track every expense, pay quarterly advance tax. Complex compliance. Eligible for audit if expenses exceed norms. Taxable income ₹15L after claiming ₹5L expenses. Tax: ₹3.75 lakhs + compliance costs.

With This Hack

Using 44ADA: Taxable income = 50% of ₹20L = ₹10L. Minus ₹75K standard deduction = ₹9.25L taxable. Tax: ₹2.2 lakhs. Zero compliance burden. Single advance tax payment. No audit risk.

💰 ₹1.55 lakhs tax + ₹50K compliance costs saved = ₹2.05 lakhs total

Common Pitfalls to Avoid

Cannot claim actual expenses - stuck with 50% deemed profit even if expenses are higher
Digital receipt percentage calculated per financial year - track carefully
Threshold is per professional, not per business - can't split income
Once you opt for 44ADA, must continue for 5 years unless income exceeds threshold
Foreign clients still need GST registration for export of services