Half Your Receipts, Taxed, No Books

For most Indian freelancers in a specified profession, Section 44ADA is the whole story. You declare 50 per cent of gross receipts as income, pay tax on that at your slab rate, and keep no detailed books. For a designer, developer, writer or consultant working from a laptop with minimal real expenses, that is a very favourable arrangement, and it is why the form is ITR-4 for most freelancers. The non-audit due date is now 31 August.

Who can use 44ADA

A resident individual in a specified profession, within the receipts limit.

Sources report the limit at Rs 75 lakh where cash receipts are within the prescribed small proportion, and Rs 50 lakhotherwise. Verify the current figures.

It is not available to an LLP or a company. This is the point most relevant to a growing freelancer, because it means incorporating removes it. See our article on company registration for freelancers.

Which form

ITR-4 where you use 44ADA and meet the conditions, including the total income limit.

ITR-3 where you do not, or cannot: receipts above the limit, a desire to declare a lower margin, capital gains alongside, or any of the other circumstances that push you out of ITR-4.

The dates

Case

AY 2026-27

ITR-3 or ITR-4, no audit

31 August 2026

Audit applies

31 October, extended by circular for AY 2026-27

The move from 31 July to 31 August for non-audit business and professional filers is reported as a permanent change from AY 2026-27 under the Finance Act 2026. If you have filed by 31 July for years, note the change but do not rely on the extra month.

Foreign clients

A great many Indian freelancers bill abroad. Three things follow.

It is still Indian income for a resident, and taxable here.

GST treats it as an export of services, generally zero-rated, with a Letter of Undertaking filed annually. See our article on LUT filing.

Receipts should be traceable. Foreign inward remittance documentation supports both the GST export position and the income tax position.

Where tax has been withheld abroad, relief may be available under the applicable treaty, which needs its own documentation.

When 44ADA stops working

Receipts cross the limit. You move to books and, depending on the threshold, audit.

Your actual margin is below 50 per cent. Declaring a lower figure generally requires books and may require audit.

You incorporate. The scheme is unavailable to an LLP or a company.

You take on employees and real costs. At that point the presumed 50 per cent may be worse than your actual position.

Documents to keep

• Invoices raised, with a running record of receipts

• Bank statements for the account receiving professional income

• Form 26AS and the AIS, to check TDS deducted by clients

• TDS certificates

• Foreign inward remittance documentation

• GST returns, reconciled to receipts declared

• Advance tax challans

Advance tax applies to freelancers. A professional with no employer deducting TDS has to pay advance tax in instalments, and interest follows if they do not. This is the single most common surprise for a first-year freelancer.

How Northrop LLP helps

Northrop LLP works out whether presumptive taxation is actually better on your numbers, reconciles receipts to GST and the AIS, manages advance tax, and files the return.