Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
Two ways to compute
Professional income falls under ‘profits and gains of business or profession’. You compute it either presumptively — 50% of receipts under 44ADA, no expense tracking — or on actual basis: gross receipts minus allowable expenses and depreciation. The choice depends on your real cost ratio and the limits.
Then taxed at your slab
The professional income is added to your total income (with any salary, rent, interest) and taxed at your slab rates under your chosen regime. TDS that clients deducted (often 10% under Section 194J) is credited against this tax, with any excess refunded. Advance tax may apply on professional income — plan for it.
A worked example
Example: a consultant with ₹40 lakh receipts on 44ADA is taxed on ₹20 lakh at slab rates; clients deducted ₹4 lakh TDS, credited against the tax. Another with high costs computes actual income of ₹14 lakh and is taxed on that. Either way, the income joins the slab structure and TDS is set off. Our team can compute and file your professional income.