Section 44AD Tax Calculator

A small shop or trading business in India can skip detailed accounting and declare a fixed share of its turnover as profit. Section 44AD sets that share at 6 percent for turnover received through banking or digital channels, and 8 percent for everything else. The tax is then worked out on that deemed profit. This page does the arithmetic under both income tax regimes and tells you which is cheaper.

How the profit is set

You enter two figures: turnover received by digital or banking channels, and turnover received in cash or other ways. The page multiplies the first by 6 percent and the second by 8 percent and adds them. The result is shown as the presumptive profit, along with its share of total turnover. Other income, such as interest, is added when tax is computed, and you can enter 80C and 80D amounts for the old regime.

The turnover limit

The total of the two turnover boxes must stay within the limit. If cash is no more than 5 percent of the total, the limit is 3,00,00,000. If cash is above that, it is 2,00,00,000. The page calculates the cash share, picks the limit, and refuses to continue if your turnover is higher, with a message that gives both figures. The scheme is not open to professionals covered by section 44ADA, to agency or brokerage businesses or to limited liability partnerships.

A worked example

The default is a trader with 2,70,00,000 of digital turnover and 10,00,000 in cash. The cash share is under 5 percent, so the limit is 3 crore. Profit is 6% × 2,70,00,000 + 8% × 10,00,000 = 16,20,000 + 80,000 = 17,00,000, which is 6.07% of turnover. The new regime taxes this at 1,45,600 including cess; the old regime, with 1,50,000 under 80C and 25,000 under 80D, taxes 15,25,000 at 2,80,800. The new regime is cheaper by 1,35,200, so the advance tax for 15 March is the lower figure, 1,45,600. In the second sample, with 30,00,000 of digital and 1,50,00,000 of cash turnover, the cash share is high, so the limit is 2 crore and the profit is 13,80,000, or 7.67%. The tax is 90,480 against 1,80,960.

Why the rates differ

The lower rate for digital receipts is an incentive: it pays less tax to receive money through banking channels, and it leaves a trail that the tax office can see. The page makes the effect visible. Moving the same turnover from cash to digital reduces the profit declared, so changing the split in the two boxes shows how much the rule is worth to you.

Edge cases

If both turnover boxes are zero, the page asks you to enter your turnover. A cash share of exactly 5 percent still qualifies for the 3 crore limit. Other income and the age setting affect the tax but not the presumptive profit. A loss cannot be shown, because the scheme sets a minimum profit; declaring less requires books of account and, in some cases, an audit.

Limits

Eligibility turns on the kind of business and on conditions such as the nature of your receipts and past choices, none of which the page can verify. It does not check advance-tax interest, goods and services tax, or state rules. The old-regime comparison includes only the fields shown. The year is FY 2025-26, and the notes advise checking the current rates and limits.

Related tools

• 44ADA Tax Calculator is the matching scheme for professionals declaring half of their receipts.
• MSME Classification Checker shows the size class that goes with your turnover.
• Profit Margin Calculator compares the deemed margin with your real one.
• Advance Tax Calculator puts the presumptive payment into a dated schedule.