Presumptive Taxation 2025

Presumptive Taxation updated in Income Tax Bill 2025 - taxpayers must declare profits at actuals or standard rate, whichever is higher.
OPEN FD
Presumptive Taxation 2025
OPEN FD
4 min
22 August 2025

Ease your tax filing with the Presumptive Taxation Scheme (PTS). Designed for small businesses and professionals, this scheme lets you declare income at a fixed rate without maintaining complex books of accounts—making tax compliance faster, simpler, and stress-free.

Presumptive taxation

The Presumptive Taxation Scheme was introduced to reduce the compliance burden for small taxpayers. Instead of maintaining detailed records, eligible individuals can declare income as a fixed percentage of turnover or gross receipts.

It ensures convenience while promoting honest reporting of profits—making tax filing simpler for businesses and professionals.

While PTS helps reduce tax-related stress, you can also simplify your investments with Bajaj Finance Fixed Deposits, offering assured returns of up to 7.30% p.a. for senior citizens and flexible tenures from 12 to 60 months. Open FD.

 

Key takeaways

  • Higher Turnover Limits: More businesses and professionals can now opt in.

  • Transparent Profit Reporting: Actual profits must be disclosed if higher than the presumptive rate.

  • Balanced Compliance: Maintains simplicity while preventing misuse.

  • Reduced Tax Disputes: Clearer rules mean fewer conflicts with authorities.

  • Boost to Digital Payments: Lower rates on digital receipts encourage cashless transactions.

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What is presumptive taxation scheme (PTS)?

The PTS is an alternate method of taxation where small taxpayers declare income at a fixed rate instead of maintaining detailed accounts.

Eligibility:

  • Businesses with turnover up to Rs. 3 crore under Section 44AD.

  • Professionals with gross receipts up to Rs. 75 lakh under Section 44ADA.

Tax Computation:

  • Businesses: Declare 6% (digital) or 8% (cash) of turnover.

  • Professionals: Declare 50% of receipts as taxable income.

For taxpayers seeking low-risk, steady returns, Bajaj Finance FDs act as a perfect complement—offering fixed earnings unaffected by market volatility. Invest now and earn up to 7.30% p.a. returns. Open FD.

Also Read: Taxation Meaning

Income Tax Bill 2025: Clarity on presumptive taxation

The New Income Tax Bill 2025 removes ambiguity around Sections 44AD and 44ADA.

  • Taxpayers must now declare either 6%/8% of turnover (as applicable) or actual profits, whichever is higher.

  • This change aligns declared income with real earnings and ensures transparency.

Why is this Important?

  1. Stops Underreporting of Profits
    Businesses earning higher profits can no longer misuse the presumptive system.

  2. Fewer Tax Disputes
    Clearer guidelines mean reduced chances of litigation with the Income Tax Department.

  3. Promotes Honest Tax Practices
    Encourages accurate reporting and builds accountability in compliance.

  4. Simplifies with Fairness
    Balances simplified filing with fair contribution to the tax system.

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Who will be most affected by the new rules?

  • Small Businesses & Traders: Can benefit from higher turnover limits.

  • Freelancers & Professionals: Doctors, lawyers, IT consultants must realign tax planning under new gross receipt thresholds.

  • Cash-Heavy Businesses: Firms depending on cash will face higher tax liability compared to digital-first firms.

 

Examples of presumptive taxation

  • Small Retailers: Grocery shop with Rs. 2 crore turnover → taxed at 8%.

  • Freelancers: Graphic designer earning Rs. 50 lakh → 50% considered as income.

  • Transport Operators: Pay fixed tax per vehicle under Section 44AE.

  • Medical Clinics: Clinics under Rs. 75 lakh turnover declare 50% as profit.

  • Wholesale Traders: Eligible for 8% if within Rs. 3 crore turnover limit.

 

Also Read: What is Tax Avoidance

Conclusion

The Presumptive Taxation Scheme is a smart solution for small businesses and professionals who want hassle-free tax compliance. With the updates in the Income Tax Bill 2025, taxpayers must report actual profits if they exceed presumptive rates—making the system fairer and more transparent.

To complement your tax-saving efforts, secure your money with Bajaj Finance Fixed Deposits. With guaranteed returns, flexible tenures, and some of the industry’s highest interest rates of up to 7.30% p.a., FDs provide the stability your portfolio needs while you focus on business growth. Invest now.

Frequently asked questions

Who is eligible for the presumptive taxation scheme?

The Presumptive Taxation scheme is available to:

  • Individuals
  • Hindu Undivided Families (HUFs)
  • Partnership firms (except LLPs)

Companies and Limited Liability Partnerships (LLPs) are not eligible under this scheme.

What does 6% Presumptive Taxation mean?

Under Presumptive Taxation (Section 44AD), businesses with turnover within the prescribed limit can declare a fixed percentage of profits. For digital transactions, 6% of turnover is considered taxable income, while for cash transactions, it's 8%.

What is the turnover limit for Presumptive Taxation?

To opt for Presumptive Taxation under Section 44AD, your business turnover must not exceed Rs. 3 crore in a financial year.

What are the latest changes in Presumptive Taxation rules?

The scheme continues with deemed profit rates of 8% for cash and 6% for digital transactions. For professionals under Section 44ADA, the limit has been raised to Rs. 75 lakh from Rs. 50 lakh in the latest tax bill.

How is tax calculated under the Presumptive Taxation scheme?

Tax is calculated by applying 8% on cash-based turnover or 6% on digital receipts. This estimated income is considered taxable without the need to maintain detailed accounts.

Can you give an example of Presumptive Income?

Sure. If a graphic designer earns Rs. 60 lakh in a year, they can declare 50% (Rs. 30 lakh) as taxable income under Section 44ADA. Similarly, a transporter with 5 trucks pays tax based on a fixed income per truck under Section 44AE.

Who is eligible to opt for Presumptive Taxation?

Businesses with annual turnover below Rs. 3 crore and professionals earning under Rs. 75 lakh can opt in. However, once chosen, you must file ITR-4 and cannot claim deductions under Sections 30 to 38 for business expenses.

Why choose Bajaj Finance FD over other investment options?

Bajaj Finance FDs are rated highly for safety, offer competitive rates up to 7.30% p.a., and allow multiple tenures, making them a reliable option compared to market-linked instruments. Open FD.

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