44ADA is now Section 58: what changes for freelancers in FY 2026-27
Short answer
- From 1 April 2026, Section 58 of the Income-tax Act, 2025 replaces 44AD, 44ADA and 44AE.
- For professionals the rule is the same: 50% of gross receipts is taxable, receipts up to ₹50 lakh (₹75 lakh if cash is at most 5%).
- Advance tax: still one instalment by 15 March (Section 408(2)).
- Your FY 2025-26 return, filed in 2026, still uses 44ADA.
Old vs new, side by side
| Rule | 44ADA (Income-tax Act, 1961) | Section 58 (Income-tax Act, 2025) |
|---|---|---|
| Applies to | Income up to FY 2025-26 | Tax year 2026-27 onwards |
| Deemed income | 50% of gross receipts | 50% of gross receipts |
| Receipts limit | ₹50 lakh; ₹75 lakh if cash ≤ 5% | ₹50 lakh; ₹75 lakh if cash ≤ 5% |
| Advance tax | One instalment by 15 March | One instalment by 15 March (s.408(2)) |
| Losses and deductions | Restricted | Restriction widened under s.58(4) (reported) |
| Year label | Previous year / assessment year | Tax year |
What is the Section 58 limit for FY 2026-27?
₹50 lakh of gross receipts, or ₹75 lakh if cash receipts are no more than 5% of total receipts. Above that, you keep books and may need an audit.
Can software engineers use Section 58?
The professional scheme covers specified professions: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration and others notified. Many CAs treat software development as engineering or technical consultancy, but it is debated, and writing, design and marketing are less clear. If your work doesn't qualify, the business scheme (6% or 8% of turnover) or regular books may apply. Confirm with your CA.
Section 58 with salary
Allowed. Salary is taxed under its own head; the 50% rule applies only to professional receipts. Both add up for slab tax, and salary TDS reduces your advance tax.
When is advance tax due?
All of it by 15 March 2027 for tax year 2026-27, if the amount after TDS is ₹10,000 or more. The CBDT's transition FAQ (Q2.20) confirms the single instalment continues.
Questions
Is 44ADA replaced by Section 58?
Yes, for income from 1 April 2026 (tax year 2026-27). Section 58 of the Income-tax Act, 2025 restates 44AD, 44ADA and 44AE.
Which law applies to my FY 2025-26 return?
The Income-tax Act, 1961. Income earned up to 31 March 2026 is still taxed under 44ADA, and the return filed in 2026 uses 44ADA.
Did the 50% rate or the ₹75 lakh limit change?
No. 50% of gross receipts, up to ₹50 lakh, or ₹75 lakh if cash receipts are at most 5%.
Did the advance tax rule change?
No. Presumptive taxpayers pay all advance tax in a single instalment by 15 March, now under Section 408(2).
What does Section 58(4) change?
Reports say it widens the bar on setting off losses and claiming deductions against presumptive income. Ask your CA if you have losses.
Sources
- CBDT, FAQs on Interplay and Transition (Q2.15, Q2.20): www.incometaxindia.gov.in
- Income-tax Act, 2025 as amended by Finance Act 2026: www.incometaxindia.gov.in
- Economic Times: presumptive taxation under the new Act, the 50% rule remains: economictimes.indiatimes.com
- SS Chandak & Co: Income-tax Act 2025 guide for FY 2026-27 (slabs, s.156 rebate, Section 58 limits): sschandak.com