Can I declare less than 50% under 44ADA?

CA Vijay R Singh, FCA
Chartered Accountant · ICAI M.No. 153926 · FRN 136869W

Short answerYes, but with conditions. 50% is the minimum presumed profit under 44ADA. To declare less, you must maintain books of account and, if your total income exceeds the basic exemption limit, get a tax audit — the very compliance 44ADA was meant to avoid. So declaring under 50% only makes sense if your real profit is genuinely lower.

50% is a floor, not a ceiling

Under Section 44ADA, declaring 50% of receipts is the minimum. You can always declare more if your true profit is higher. The question is whether you can declare less — and the answer is yes, but only by giving up the scheme’s simplicity.

The price of declaring less

If you want to show profit below 50%, you must maintain proper books of account and, where your total income crosses the basic exemption, undergo a tax audit. So you trade the easy presumptive filing for full accounting and audit — worth it only if your actual margin is genuinely lower than 50%. Confirm the conditions before opting out.

A worked example

Example: a professional with ₹40 lakh receipts and ₹30 lakh of genuine expenses (real profit 25%) can declare ₹10 lakh — but must keep books and get audited. Another with only ₹10 lakh of expenses should simply use 44ADA’s 50% (₹20 lakh) and skip the audit. The right choice turns on your actual cost ratio. Our team can compare the two outcomes for you.

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This answer is general information for professionals, not tax advice. Tax rates, thresholds and forms change with each Finance Act — please confirm the current position for your own facts, or speak to us, before acting.