Section 58 Under Income-tax Act, 2025: The New Presumptive Taxation Framework for Business, Profession & Transporters
From 44AD, 44ADA & 44AE to One Section 58 — Complete Practical Guide for Tax Consultants, Businesses and Professionals
Applicable from: Tax Year 2026-27, i.e. income earned from 1 April 2026 to 31 March 2027
Important: FY 2025-26 / AY 2026-27 continues to be governed by the Income-tax Act, 1961. Section 58 applies to income governed by the Income-tax Act, 2025 from Tax Year 2026-27 onwards. The Income-tax Department confirms that the three earlier presumptive taxation provisions—Sections 44AD, 44ADA and 44AE—have been consolidated into Section 58 in the new Act.
Introduction: 44AD, 44ADA and 44AE Have Not Simply Disappeared
The new Income-tax Act, 2025 has reorganised the presumptive taxation provisions.
Under the Income-tax Act, 1961, taxpayers had to refer separately to:
- Section 44AD — eligible business
- Section 44ADA — specified profession
- Section 44AE — business of plying, hiring or leasing goods carriages
From Tax Year 2026-27, these three provisions are brought together under Section 58.
The practical calculation remains familiar in many cases. The important change is that the taxpayer and tax professional now have to read a single consolidated provision, its three-table structure, the new definitions, Section 62 for books of account and Section 63 for audit.
This is therefore more than a simple section-number change, but it is also not correct to say that the government has completely changed the presumptive taxation rates.
Section 58 at a Glance
| Sl. No. | Category under Section 58 | Earlier provision | Main limit / condition | Presumptive income |
|---|---|---|---|---|
| 1 | General business other than goods carriage | Section 44AD | ₹2 crore, or ₹3 crore where cash receipts do not exceed 5% | 6% + 8%, or higher actual profit |
| 2 | Plying, hiring or leasing goods carriage | Section 44AE | Maximum 10 goods carriages | ₹1,000 per tonne/month for heavy goods vehicle; ₹7,500 per vehicle/month for other goods carriage, or higher actual profit |
| 3 | Specified profession | Section 44ADA | ₹50 lakh, or ₹75 lakh where cash receipts do not exceed 5% | 50% of gross receipts, or higher actual profit |
The figures above are substantially carried forward from the earlier law. The major change is the consolidation into Section 58 and the new terminology and cross-references.
What Does Section 58 Actually Say?
The opening provision establishes the relationship between Section 58 and the normal business/profession computation provisions.
“The provisions of sections 26 to 54, to the extent contrary to this section, shall not apply”
In simple terms, where Section 58 prescribes a special method for computing presumptive income, the normal computation provisions cannot be applied in a manner inconsistent with Section 58.
The new section then places the three categories into one table.
This is the biggest structural change from the old Act.
Section 58(2) — Table 1: General Business
Who can use Table 1?
Table 1 covers:
Any business other than the business of plying, hiring or leasing goods carriages covered by Table 2.
The taxpayer must be an eligible assessee.
The new Act defines eligible assessee separately in Section 58(11).
Broadly, it covers:
- Resident Individual
- Resident HUF
- Resident partnership firm other than LLP
subject to the specified exclusions.
An eligible assessee must not:
- claim the specified deduction under Section 144;
- claim the specified Chapter VIII-C deduction;
- carry on specified profession;
- earn income in the nature of commission or brokerage;
- carry on agency business.
Table 1 — Turnover limit
| Situation | Maximum turnover / gross receipts |
|---|---|
| Normal case | ₹2 crore |
| Cash receipts do not exceed 5% of total turnover/gross receipts | ₹3 crore |
The ₹3 crore limit is not a new 2026 increase. It was already available under Section 44AD from FY 2023-24 where the cash-receipt condition was satisfied.
How is income calculated under Section 58(2), Table 1?
There are effectively two calculations:
Calculation A — Presumptive percentage
6% of turnover/gross receipts received through specified banking or online mode; plus
8% of the remaining turnover/gross receipts.
Calculation B — Actual profit
The taxpayer may claim the profit actually earned.
The amount taxable under Section 58 is the higher of the prescribed presumptive computation or the actual profit claimed.
Example
Suppose a contractor has:
- Total turnover: ₹1,00,00,000
- Digital/banking receipts: ₹80,00,000
- Other receipts: ₹20,00,000
Presumptive calculation:
- ₹80,00,000 × 6% = ₹4,80,000
- ₹20,00,000 × 8% = ₹1,60,000
Total presumptive income = ₹6,40,000
If the taxpayer claims actual profit of ₹7,00,000, the higher amount—₹7,00,000—is relevant.
If actual profit is ₹5,50,000, the presumptive amount of ₹6,40,000 remains relevant.
What is "specified banking or online mode"?
This is important when determining the 6% portion.
The new Act separately uses the concept of specified banking or online mode.
Therefore, a tax consultant should not simply classify every non-cash receipt as "digital".
The nature and mode of receipt should be verified from the bank statement, payment records and applicable definitions.
Old Act equivalent — Section 44AD
Under the Income-tax Act, 1961, the corresponding provision was Section 44AD.
The old provision similarly provided:
- 8% general presumptive rate;
- 6% for qualifying account-payee/electronic receipts;
- ₹2 crore basic turnover limit;
- ₹3 crore enhanced limit subject to the cash-receipt condition;
- actual higher profit could be declared.
Consultant's conclusion
Section 58 Table 1 is substantially the successor to Section 44AD.
The main change is the legal structure and cross-referencing—not the basic 6%/8% calculation.
Section 58(2), Table 2 — Goods Carriage Business
Table 2 covers:
Business of plying, hiring or leasing goods carriage.
The taxpayer must not own more than:
10 goods carriages at any time during the tax year.
This is the new equivalent of old Section 44AE.
Presumptive income
| Type of vehicle | Section 58 calculation |
|---|---|
| Heavy goods vehicle | ₹1,000 per tonne of gross vehicle weight or unladen weight, as applicable, per month/part month |
| Other goods carriage | ₹7,500 per vehicle per month/part month |
| Actual profit | Higher actual profit can be claimed |
A heavy goods vehicle is one whose gross vehicle weight exceeds 12,000 kg.
Example
A transporter owns:
- 2 heavy goods vehicles of 15 tonnes each for 12 months
- 2 other goods carriages for 12 months
Heavy vehicles:
2 × 15 tonnes × ₹1,000 × 12 = ₹3,60,000
Other vehicles:
2 × ₹7,500 × 12 = ₹1,80,000
Total presumptive income:
₹5,40,000
If actual profit claimed is higher, the higher amount is considered.
Old Act Equivalent — Section 44AE
Section 44AE of the 1961 Act contained the goods-carriage presumptive scheme.
It already provided:
- maximum 10 goods carriages;
- ₹1,000 per tonne for heavy goods vehicles;
- ₹7,500 per vehicle for other goods carriages;
- month or part of month;
- higher actual profit option.
Therefore, there is no major rate change here.
The provision has principally been moved into Table 2 of Section 58.
Section 58(2), Table 3 — Specified Profession
This is the successor to old Section 44ADA.
Table 3 covers a specified profession referred to in Section 62(4).
The normal gross-receipt limit is:
₹50 lakh
The limit becomes:
₹75 lakh
where cash receipts do not exceed 5% of gross receipts.
Presumptive income
The income is:
50% of gross receipts or actual profit, whichever is higher.
Example
A professional has gross receipts of ₹60 lakh and satisfies the cash-receipt condition.
50% of ₹60 lakh = ₹30 lakh
If actual profit claimed is ₹34 lakh, the higher amount of ₹34 lakh is relevant.
If actual profit is ₹25 lakh, the presumptive amount of ₹30 lakh applies.
Old Act Equivalent — Section 44ADA
Under Section 44ADA of the 1961 Act:
- specified professionals were covered;
- normal gross-receipt limit was ₹50 lakh;
- enhanced limit of ₹75 lakh applied where cash receipts did not exceed 5%;
- presumptive income was 50% of gross receipts or higher actual profit.
Therefore:
₹50 lakh → ₹75 lakh is not a new Section 58 benefit.
It already existed under the old Act.
Who Are Specified Professionals Under the New Act?
This is one area where a tax consultant should pay particular attention.
Section 62(4) defines specified profession to include:
- legal;
- medical;
- engineering;
- architectural;
- accountancy;
- technical consultancy;
- interior decoration;
- information technology;
- company secretary;
- other professions notified by the Board.
This is relevant because Section 58 Table 3 specifically refers to Section 62(4).
Practical point
A person should not decide eligibility merely by saying:
"I am a freelancer, therefore I can use presumptive taxation."
First identify the actual nature of the professional activity.
For example, IT-related professional activity requires careful examination because "information technology" is expressly included in Section 62(4).
Section 58(3) — What If Actual Profit Is Lower?
This is an important compliance provision.
Where a taxpayer covered by Section 58 claims that actual profit is lower than the presumptive amount and total income exceeds the maximum amount not chargeable to tax, the taxpayer must:
- maintain the prescribed books/documents under Section 62; and
- get the accounts audited under Section 63.
The new Section 58 therefore links presumptive taxation directly with the new books and audit provisions.
Consultant's practical interpretation
Presumptive taxation is useful when the prescribed percentage reasonably represents the taxpayer's income.
If actual profit is substantially lower, the taxpayer should not simply reduce the profit in the return without examining:
- Section 58;
- Section 62;
- Section 63;
- applicable audit requirements;
- supporting books and documents.
Section 58(4) — Loss, Allowance and Deduction
This is one of the provisions that deserves special attention in professional tax practice.
The Act states:
“Any loss, allowance or deduction allowable under the provisions of this Act”
is not allowed against income computed under Section 58(2).
In practical terms, the presumptive income under Section 58 should not be treated like ordinary business profit where every eligible business deduction can simply be subtracted from it.
This is a provision that should be checked carefully whenever the taxpayer has:
- brought-forward business loss;
- current business loss;
- depreciation-related issues;
- special deductions;
- other allowances;
- multiple business/profession activities.
Important
This does not mean that every deduction available elsewhere in the tax return disappears.
The restriction concerns the computation of income under Section 58. Other heads of income and deductions must be examined separately under the applicable provisions.
Section 58(5) — Salary and Interest to Partners
For the goods-carriage category, where the assessee is a firm, Section 58 permits deduction of partner salary and interest subject to the conditions and limits specified in Section 35(e) of the new Act.
This is broadly the successor to the treatment that existed under Section 44AE.
Important distinction
Do not automatically apply this rule to every partnership firm using Section 58.
The specific provision in Section 58(5) is linked to Table 2 — goods-carriage business.
Section 58(6) — Written Down Value and Depreciation
Presumptive taxation does not mean that the asset's depreciation history is ignored.
Section 58 provides that the written down value is calculated as though depreciation had been claimed and allowed for the relevant tax years.
This matters when:
- an asset is subsequently sold;
- capital gains/depreciation-related computation becomes relevant;
- the taxpayer moves from presumptive taxation to regular computation.
A tax consultant should therefore maintain an internal fixed-asset record even when detailed books are not required for the presumptive activity.
Section 58(7) — Five-Year Restriction
This provision continues the important old Section 44AD consequence.
Where an eligible assessee declares presumptive profit under Table 1 and subsequently, during the five succeeding tax years, declares profit contrary to the presumptive provision, the taxpayer can lose eligibility for Section 58 for the subsequent five tax years.
Very important
This should not be described as a universal five-year lock-in for every Section 58 taxpayer.
The provision specifically relates to:
Section 58(2), Table 1 — general business.
Section 58(8) — Books and Audit After Breaking the Presumptive Pattern
Where the five-year restriction under Section 58(7) becomes applicable and the taxpayer's total income exceeds the maximum amount not chargeable to tax, books and audit requirements are triggered under Sections 62 and 63.
This is why a taxpayer should not treat the choice of presumptive taxation as an isolated annual decision.
The history of the previous five tax years can become relevant.
Section 58(9) — Non-Account-Payee Cheque Is Treated as Cash
For Table 1 and Table 3, a cheque or bank draft that is not account-payee is treated as receipt in cash for the relevant purpose.
This can directly affect:
- ₹3 crore business threshold;
- ₹75 lakh professional threshold;
- 5% cash-receipt test.
Practical record to maintain
A taxpayer should be able to distinguish:
- cash;
- account-payee cheque;
- bank transfer;
- UPI;
- payment gateway;
- other qualifying electronic receipts;
- non-account-payee cheque/draft.
Section 58(10) — Special Treatment of Goods-Carriage Business
Section 58 provides that Sections 62 and 63 do not apply, to the specified extent, to the goods-carriage business covered by Table 2.
The income/receipts from that business are also excluded while computing the monetary limits under those sections.
This is another reason why Table 2 should be studied separately rather than assuming that all three categories operate identically.
Section 58(11) — The New Definitions
The new Act brings important eligibility definitions directly into Section 58.
Eligible assessee — broadly
| Condition | Requirement |
|---|---|
| Individual | Resident |
| HUF | Resident |
| Partnership firm | Resident and not LLP |
| Specified profession | Cannot be carried on for Table 1 |
| Commission/brokerage | Cannot earn income in such nature for Table 1 |
| Agency business | Cannot carry on agency business for Table 1 |
| Certain deductions | Cannot have claimed specified deductions |
This is more convenient for a tax consultant because the eligibility conditions are now located together rather than being scattered across multiple provisions.
Why Choose Section 58?
Section 58 is designed for taxpayers whose business/professional structure fits the presumptive scheme and who want a simplified method of computing taxable business/professional income.
Main practical advantages
- Presumptive income calculation instead of detailed expense-based profit computation.
- Reduced compliance burden for eligible cases.
- No need to establish every individual business expense for determining the presumptive profit.
- Lower audit/book-keeping burden where the conditions of the scheme are satisfied.
- Simple calculation based on turnover, receipts or vehicles.
- Particularly useful where actual expenses are relatively low and the prescribed presumptive profit is commercially reasonable.
But Section 58 should not be selected blindly
A taxpayer should compare:
Actual profit under regular computation
vs.
Presumptive profit under Section 58
before deciding the most suitable approach.
For a low-margin business with substantial genuine expenses, presumptive taxation may not always be the best practical choice.
Section 58 vs Regular Business Computation
| Particular | Regular computation | Section 58 |
|---|---|---|
| Actual expenses | Generally relevant | Presumptive computation |
| Profit | Actual business profit | Prescribed percentage/amount or higher actual profit |
| Detailed books | Depending on Section 62 | Generally reduced burden where conditions satisfied |
| Audit | Depending on Section 63 | Generally avoided if scheme conditions are satisfied |
| Expense-by-expense deduction | Relevant | Not separately deducted against presumptive income |
| Profit calculation | Detailed | Simplified |
| Best suited for | Businesses with complex/high expenses | Eligible businesses/professions with suitable margins |
The key is not simply "less tax" or "less paperwork". The taxpayer should choose the method after considering actual margins, cash receipts, eligibility, future plans and compliance history.
Section 58 and ITR Filing — What Should a Tax Consultant Expect?
This is an important area because the new Section 58 is effective from Tax Year 2026-27, but the return for that tax year will be filed later.
The Income Tax Department has confirmed that old forms and new forms will coexist during the transition and that the portal will guide taxpayers according to the selected year.
For FY 2025-26 / AY 2026-27, the old Sections 44AD/44ADA/44AE continue.
For income of Tax Year 2026-27 onward, the new Act and new terminology apply.
What Information Is Likely to Be Required in the Future ITR?
The exact ITR for Tax Year 2026-27 should be followed as finally notified and implemented on the portal.
Therefore, the following should be treated as practical expected information, not as a claim that every field has already been officially notified in the final return utility.
A Section 58 return is logically expected to require information such as:
Basic classification
- Whether income is from business or profession
- Category of presumptive taxation
- Section 58 Table 1 / Table 2 / Table 3
- Nature of business/profession
- Business/profession description
For Table 1 — General Business
Expected information may include:
- Total turnover/gross receipts
- Amount received through specified banking/online mode
- Balance turnover/gross receipts
- Cash receipts
- Whether the ₹3 crore enhanced threshold is being used
- Presumptive income at 6%
- Presumptive income at 8%
- Actual profit, where higher profit is claimed
- Final income offered under Section 58
For Table 2 — Goods Carriage
Expected information may include:
- Number of goods carriages
- Type of vehicle
- Heavy goods vehicle / other goods carriage
- Gross vehicle weight/unladen weight where relevant
- Number of months/part months
- Presumptive income
- Actual higher income, if claimed
- Partner salary/interest where applicable
For Table 3 — Profession
Expected information may include:
- Nature of specified profession
- Gross professional receipts
- Cash receipts
- Qualifying banking/online receipts
- Whether ₹75 lakh limit is being relied upon
- 50% presumptive income
- Actual higher profit, if claimed
Possible Future ITR Checkboxes / Questions
Again, these are expected practical fields, not a statement of the final notified return design.
A future ITR utility may logically ask questions such as:
| Possible question | Why it may be required |
|---|---|
| Are you declaring income under Section 58? | Select presumptive scheme |
| Select category: Table 1 / Table 2 / Table 3 | Identify applicable calculation |
| Are you an eligible assessee? | Eligibility validation |
| Is your turnover within ₹2 crore? | Table 1 threshold |
| Are cash receipts ≤5%? | ₹3 crore threshold |
| Are you using specified banking/online receipts? | 6% calculation |
| What is total turnover/gross receipt? | Presumptive calculation |
| What is qualifying banking/online receipt? | 6% calculation |
| What is balance receipt? | 8% calculation |
| Are you declaring actual profit higher than presumptive profit? | Higher-profit rule |
| Are you declaring profit lower than prescribed amount? | Audit/bookkeeping validation |
| Is your profession covered by Section 62(4)? | Table 3 eligibility |
| What is gross professional receipt? | 50% calculation |
| Are cash receipts ≤5%? | ₹75 lakh threshold |
| Number of goods carriages? | Table 2 eligibility |
| Heavy goods vehicle details? | Weight-based calculation |
| Months/part months owned? | Vehicle computation |
| Are you affected by the five-year restriction? | Table 1 lock-in |
| Have you claimed specified deductions? | Eligible-assessee validation |
The final return may use different wording or combine several questions into a single screen.
ITR-4 or ITR-3 — Practical Expectation
The return-form classification should always be checked against the ITR form notified for the relevant Tax Year.
For the old Act, presumptive taxpayers meeting ITR-4 conditions generally used ITR-4, while cases outside ITR-4 eligibility used ITR-3.
For the new Act, the same broad practical distinction is expected to continue, but the statutory references in the return will change from Sections 44AD/44ADA/44AE to the new provisions.
Therefore, a tax consultant should not prepare a client's Tax Year 2026-27 return by simply copying the old AY 2026-27 return structure.
The Income Tax Department has already stated that the portal will support the old and new frameworks during the transition and that taxpayers should select the correct year.
What Records Should Be Maintained Even Under Section 58?
A common misunderstanding is:
"Presumptive taxation means no records are required."
That is not a good professional practice.
Even where detailed books are not required for the presumptive activity, the taxpayer should maintain sufficient underlying records to establish the figures reported in the return.
For a general business
Keep:
- Sales invoices
- Purchase invoices
- Sales register/summary
- Bank statements
- UPI statements
- Payment gateway statements
- Cash receipt records
- Account-payee cheque details
- Non-account-payee cheque details
- GST returns, where applicable
- TDS certificates
- Form 26AS
- AIS/TIS information
- Major expense records
- Loan statements
- Fixed-asset details
- Debtor/creditor summary
- Opening and closing capital information
Additional Records for Professionals
A professional should additionally maintain:
- Professional invoices
- Client-wise receipt summary
- Bank statements
- UPI/payment gateway records
- TDS certificates
- Form 26AS/AIS reconciliation
- Appointment/engagement records where appropriate
- GST records, if registered
- Professional expenses
- Fixed-asset details
- Software/subscription expenses
- Receivable summary
These records become especially important if the taxpayer later needs to explain the difference between receipts appearing in third-party information and receipts reported in the ITR.
Additional Records for Goods-Carriage Business
Transport operators should maintain:
- RC of each vehicle
- Vehicle number
- Type of vehicle
- Gross vehicle weight
- Unladen weight, where relevant
- Purchase/hire-purchase documents
- Ownership records
- Vehicle-wise months of ownership
- Freight bills
- Transport invoices
- Bank statements
- Cash receipts
- TDS certificates
- GST records, where applicable
- Fuel records
- Major repair records
- Insurance documents
- Loan/hypothecation documents
Even though the presumptive income is calculated using the statutory formula, these documents provide the factual basis for the number of vehicles and period of ownership.
What If the Department Asks for Evidence?
A presumptive return does not mean the taxpayer can report an arbitrary turnover.
The taxpayer should be able to explain:
Where did the turnover come from?
How much was received through banking/online modes?
How much was received in cash?
Does the 5% condition actually apply?
Is the taxpayer eligible for Table 1 or Table 3?
Is the profession covered by Section 62(4)?
How many vehicles were owned and for how long?
Why was the particular presumptive income reported?
This is why a simple internal turnover and receipt reconciliation is highly advisable.
A Practical Consultant's Working Paper for Section 58
Before filing the return, prepare this internal sheet:
| Check | Particular | Status |
|---|---|---|
| 1 | Nature of business/profession identified | ✓ / ✗ |
| 2 | Section 58 Table identified | ✓ / ✗ |
| 3 | Residential status checked | ✓ / ✗ |
| 4 | Individual/HUF/Firm/LLP status checked | ✓ / ✗ |
| 5 | Commission/brokerage checked | ✓ / ✗ |
| 6 | Agency business checked | ✓ / ✗ |
| 7 | Specified profession checked | ✓ / ✗ |
| 8 | Turnover/gross receipts reconciled | ✓ / ✗ |
| 9 | Cash receipts identified | ✓ / ✗ |
| 10 | Banking/online receipts identified | ✓ / ✗ |
| 11 | 5% condition checked | ✓ / ✗ |
| 12 | Presumptive income calculated | ✓ / ✗ |
| 13 | Actual profit compared | ✓ / ✗ |
| 14 | Previous Section 58 history checked | ✓ / ✗ |
| 15 | Loss/deduction implications checked | ✓ / ✗ |
| 16 | Books/audit requirement checked | ✓ / ✗ |
| 17 | ITR form eligibility checked | ✓ / ✗ |
| 18 | AIS/26AS/TDS reconciliation completed | ✓ / ✗ |
This type of working paper is more useful in professional practice than simply ticking "presumptive taxation" in the ITR.
Old Act vs New Act — Consultant's Quick Reference
| Old Act | New Act | Main change |
|---|---|---|
| 44AD | Section 58(2), Table 1 | Consolidated |
| 44AE | Section 58(2), Table 2 | Consolidated |
| 44ADA | Section 58(2), Table 3 | Consolidated |
| 44AA | Section 62 | New numbering/restructured books provision |
| 44AB | Section 63 | New numbering/restructured audit provision |
| 40(b) | Section 35(e) | Corresponding new provision for specified partner payments |
| Previous Year | Tax Year | New terminology |
| Assessment Year | Transitioned terminology under new framework | New framework |
| 6% / 8% | 6% / 8% | No major rate change |
| ₹2 crore / ₹3 crore | ₹2 crore / ₹3 crore | No major threshold change |
| ₹50 lakh / ₹75 lakh | ₹50 lakh / ₹75 lakh | No major threshold change |
| 10 goods carriages | 10 goods carriages | No change |
| ₹1,000 / ₹7,500 | ₹1,000 / ₹7,500 | No major rate change |
The Income Tax Department expressly describes the new arrangement as consolidation of Sections 44AD, 44ADA and 44AE into one section in tabular form with simplified language.
The Biggest Mistakes to Avoid in 2026
Mistake 1 — Calling ₹3 crore a new limit
It is not.
The ₹3 crore enhanced business threshold already existed under Section 44AD subject to the cash-receipt condition.
Mistake 2 — Calling ₹75 lakh a new professional limit
It is not.
The enhanced ₹75 lakh limit already existed under Section 44ADA.
Mistake 3 — Treating every freelancer as a Section 58 Table 1 taxpayer
The nature of the activity must be examined, particularly because specified professions are covered through Section 62(4).
Mistake 4 — Assuming Section 58 means "no records"
Wrong approach.
The taxpayer should maintain sufficient supporting records and reconciliation.
Mistake 5 — Ignoring the five-year history
For Table 1 taxpayers, the Section 58(7) restriction can affect future eligibility.
Mistake 6 — Ignoring the cash-receipt test
The 5% test can determine whether the enhanced threshold is available.
Mistake 7 — Treating UPI, bank transfer, cheque and cash identically
The exact mode of receipt matters for the statutory calculation.
Mistake 8 — Using old AY references for Tax Year 2026-27
The new framework uses Tax Year terminology.
What Should Tax Consultants Start Collecting From 1 April 2026?
For clients likely to use Section 58, it is sensible to start maintaining a simple monthly summary from the beginning of the Tax Year:
| Monthly information | Why |
|---|---|
| Total turnover | Section 58 limit |
| Cash receipts | 5% test |
| Banking receipts | 6% calculation |
| Other receipts | 8% calculation |
| GST turnover | Reconciliation |
| TDS income | 26AS/AIS reconciliation |
| UPI receipts | Banking/online reconciliation |
| Payment gateway receipts | Receipt reconciliation |
| Credit sales | Turnover tracking |
| Major expenses | Actual-profit comparison |
| Fixed assets | WDV tracking |
| Loans | Balance-sheet/supporting information |
| Capital introduced/withdrawn | Return reconciliation |
This will make the year-end ITR preparation considerably easier.
Future ITR Filing — What Should Tax Consultants Watch?
The Income Tax Department has already notified the Income-tax Rules, 2026 and is rolling out forms under the Income-tax Act, 2025 in phases. The Department also states that the e-filing system will support both old and new forms during the transition.
For Tax Year 2026-27, professionals should therefore watch the final ITR utility for:
- Section 58 category selection;
- Table 1/2/3 classification;
- turnover/gross-receipt reporting;
- cash receipt reporting;
- specified banking/online receipt reporting;
- presumptive income calculation;
- actual-profit declaration;
- five-year lock-in questions;
- lower-profit declaration;
- audit applicability;
- Section 62/63 compliance;
- vehicle-wise information for goods carriage cases;
- specified-profession classification.
These should be treated as expected compliance data points until the final return form/utility for the relevant Tax Year is officially prescribed.
Final View: Is Section 58 a Completely New Presumptive Tax Scheme?
No.
It is better understood as a consolidated and reorganised presumptive taxation framework.
The basic mathematics remains familiar:
Business → 6% / 8%
Profession → 50%
Goods carriage → ₹1,000 / ₹7,500
The major practical work for a tax consultant is now to understand:
- Which Section 58 table applies?
- Is the assessee eligible?
- Is the 5% cash condition satisfied?
- What is the correct turnover/gross-receipt figure?
- What portion qualifies for the 6% calculation?
- Is actual profit higher?
- Is Section 58(4) relevant because of losses/allowances/deductions?
- Does the lower-profit rule trigger books and audit?
- Does the five-year restriction apply?
- What information will have to be reported in the new ITR?
That is the real transition from 44AD / 44ADA / 44AE to Section 58.
Conclusion
The new Income-tax Act, 2025 has not fundamentally rewritten the economics of presumptive taxation. Instead, it has brought three familiar schemes under one statutory roof.
For Tax Year 2026-27 onward, a tax consultant should stop thinking of these provisions only as "old 44AD, 44ADA and 44AE with new numbers".
The correct approach is:
Section 58 → identify the correct Table → verify eligibility → determine receipt/turnover category → calculate presumptive income → check actual profit → examine Section 58(3), (4), (7) and (8) → check Sections 62 and 63 → prepare the ITR with supporting reconciliation.
That approach will make the new Section 58 much easier to apply correctly in practical tax filing.
Frequently Asked Questions
1. Is Section 58 applicable for FY 2025-26?
No. FY 2025-26 / AY 2026-27 is governed by the Income-tax Act, 1961. Section 58 applies from Tax Year 2026-27, beginning 1 April 2026.
2. Has Section 44AD been abolished?
The old Section 44AD framework has been consolidated into Section 58, Table 1 under the new Act.
3. Has the 44AD turnover limit increased to ₹3 crore?
No. The ₹3 crore enhanced limit already existed where the cash-receipt condition was satisfied.
4. Has the 44ADA limit increased to ₹75 lakh?
No. The ₹75 lakh enhanced limit already existed under the old law where cash receipts did not exceed 5%.
5. What is the new section for 44AE?
The goods-carriage presumptive scheme is now Section 58(2), Table 2.
6. What is the new section for 44ADA?
The specified-profession presumptive scheme is now Section 58(2), Table 3.
7. What is the new section for 44AD?
General eligible business is covered by Section 58(2), Table 1.
8. Can a professional use Table 1 instead of Table 3?
Eligibility depends on the nature of the activity. Specified professions referred to in Section 62(4) are dealt with under Table 3.
9. Is the five-year restriction applicable to everyone under Section 58?
No. The specific restriction in Section 58(7) relates to an eligible assessee using Table 1.
10. Does presumptive taxation mean that no records should be maintained?
No. Even where detailed books are not required, supporting records and reconciliations are strongly advisable. If lower income is claimed in circumstances covered by Section 58(3), books and audit can become mandatory.
11. Can actual profit be declared instead of the presumptive amount?
Yes. Section 58 generally compares the prescribed presumptive computation with the profit claimed to have actually been earned and uses the higher amount.
12. What happens if actual profit is lower?
Where the statutory conditions are satisfied, particularly where total income exceeds the maximum amount not chargeable to tax, books and audit requirements can arise under Section 58(3).
13. Does UPI count as cash?
No. The treatment depends on whether the receipt falls within the specified banking/online mode under the new Act. The return working should therefore classify receipts based on the statutory definition rather than simply labelling all electronic receipts informally.
14. What should be kept for Section 58?
At minimum, maintain turnover/receipt records, bank statements, cash records, invoices, TDS/AIS/26AS reconciliation and supporting documents appropriate to the business or profession.
15. Will the future ITR ask for Section 58 details?
The return for Tax Year 2026-27 will need to implement the new law, but the exact fields and wording should be taken from the final ITR form and utility notified for that Tax Year. The Department has confirmed that new forms under the 2025 Act are being rolled out in phases.
Professional Note: This article is prepared as practical study material based on the Income-tax Act, 2025 as amended by Finance Act, 2026 and official Income Tax Department material available at the time of publication. The exact ITR fields, validations and portal workflow should be verified against the notified ITR form and utility applicable to the relevant Tax Year. The statutory text should be referred to for case-specific interpretation.
