Presumtptive taxation u/s 58 Income Tax Act 2025. By CA Pankaj Kumar Mishra

Описание: Credit of This Lecture goes to NIRC of ICAI
section 58 – Presumptive Taxation (Special Provision for Computing Business/Professional Profits on Presumptive Basis)
Purpose & Applicability

Section 58 establishes a unified presumptive taxation regime for qualifying resident taxpayers — consolidating the earlier three provisions under the old Act (Sections 44AD, 44ADA and 44AE of the 1961 Act) into a single, streamlined structure.

This provision applies to:

Resident Individuals

Hindu Undivided Families (HUFs)

Partnership Firms (excluding LLPs)

carrying on business or profession eligible under the prescribed limits.Key Changes & Practical Implications

1. Consolidated Framework
Rather than separate provisions for:

Small business (old 44AD),

Professionals (old 44ADA), and

Transport operators (old 44AE),

Section 58 unifies all into one structured scheme for resident taxpayers, simplifying compliance.

2. Loss/Deduction Restrictions
Under Section 58, no intra-head or inter-head losses, allowances or deductions under the Act can be set-off against the presumptive business income computed. This is a wider restriction compared to the old regime, which may adversely impact taxpayers with legitimate losses or deduction 3. Shift to “Income Actually Earned” Concept
Professional commentators note the drafting under Section 58 reflects a shift from mere presumption of profits (as under Sections 44AD/44ADA) to aligning presumptive income with actual income earned, particularly where higher than the statutory percentage needs disclosure.

4. Tax Audit and Compliance
Tax audit is triggered based on outcome metrics (profit declared relative to turnover) rather than simply the option of presumptive scheme. Taxpayers declaring profits below fixed percentages may be subject to audit if income exceeds exemption limits.