Is it legal to declare 50% presumptive profession income?

Taxation
1

All of the youtube videos just halve the gross income when explaining presumptive professional income without explaining further. 50% is the max allowed, correct? And you can only deduct the amount you actually spend, correct? (Asking from a freelancer’s point of view)

2

Hi Vijay!
The provision that you are talking about is Sec. 44ADA of the Income Tax Act 1961.
This section requires a person carrying on certain specified professions ( interior decorators, doctors, CAs etc. to declare at least of 50% of their gross receipts (amount received from profession) as income (regardless of actual expenditure). If not , then such persons would be required to get their accounts audited by a CA.
The following conditions need to be satisfied to avail this option
(i) Gross receipts should not exceed Rs. 50 lakhs
(ii) the assessee should be an individual/ partnership firm
(iii) Assessee should be a resident

As far as I know trading derivatives is a business (rather than a profession) and other share transactions do not qualify either as business or profession. So, I doubt the relevance of this section to the share trading community.
Hope this helps

3

No no it was mostly a tax question. Sorry for being off topic. This is with regards to a freelancer’s income.

4

You can classify it as Other income and pay tax at slab rates.
Presumptive income is applicable under sec 44AD and 44ADA for business ( Trading FNO and other small business) or Professions (doctors, CAs etc).

5

My friend shows freelancing income under profession, and on presumptive basis. He passed the holy mark of 6.5 L last year so he halved the portion of his freelancing income (4L > 2L) and went under 6.5 L this way. When I asked is this allowed, he sent some youtube videos and an article from cleartax.in. A quote from that article, “If you’re a freelancer, professional or consultant, you can actually pay income tax on only half of your gross annual income. You can do this by using the Presumptive Taxation Scheme under Section 44ADA of the Income Tax Act. The only caveat is that your total income for the year should be less than ₹50 lakh.”