From Tax Year 2026-27, Sections 44AD, 44ADA, and 44AE have been consolidated into a single provision: Section 58. The framework remains broadly similar, but there are practical implications that businesses and professionals should not overlook before opting in this year.

Who Can Opt In

  • Eligible businesses with turnover up to Rs 2 crore, extendable to Rs 3 crore if cash receipts do not exceed 5 percent of total receipts for the tax year.
  • Specified professionals including doctors, lawyers, engineers, architects, and accountants with gross receipts up to Rs 50 lakh, extendable to Rs 75 lakh under the same condition.
  • Goods carriage operators owning up to 10 vehicles at any point during the tax year.

Presumptive Income Rates

  • Business: 8 percent of turnover, reduced to 6 percent where receipts are through banking or digital channels.
  • Professionals: 50 percent of gross receipts, with no further deduction permitted for expenses.
  • Goods carriages: Fixed amount per tonne of gross vehicle weight per month, or actual profit if higher.

Points Most Businesses and Professionals Miss

  • Non-account payee cheques and demand drafts are treated as cash under Section 58. Routing receipts through instruments rather than direct digital transfer does not help meet the 5 percent threshold. The enhanced turnover limit will not apply.
  • The five-year lock-in for businesses is retained. Opting in for Tax Year 2026-27 means the scheme must be continued until Tax Year 2030-31. Exiting before that triggers mandatory maintenance of full books of accounts and a tax audit for the next five years, regardless of turnover.
  • Opting out mid-way does not allow immediate re-entry. A business that exits the scheme cannot return to it for five consecutive tax years. A one-year turnover spike that causes an exit has a five-year tail.
  • Deemed depreciation applies under Section 58 whether or not it was actually claimed. Assets used in a presumptive business are treated as having been depreciated at normal rates. The written down value is reduced accordingly, which affects computations if the taxpayer later switches to the regular scheme.

The Practical Impact

Presumptive taxation continues to offer genuine compliance relief, particularly for businesses and professionals with predominantly digital receipts and stable margins. The absence of audit obligation and simplified record-keeping are real advantages. The opt-in decision, however, carries a five-year commitment for businesses. A venture with fluctuating margins, expansion plans, or significant depreciable assets should model the long-term tax cost before choosing the scheme for this tax year. The decision taken in April is not easily reversed in October.