Special provision for computing profits and gains of business profession on presumptive basis in case of certain residents
[As per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Section 58(1) of Income Tax Act 2025
58(1) The provisions of sections 26 to 54, to the extent contrary to this section, shall not apply to the specified business or profession mentioned in column B of the Table in sub-section (2).
Section 58(2) of Income Tax Act 2025
58(2)The profits and gains of any specified business or profession as mentioned in column B of the Table below, carried on by an assessee specified in column C of the said Table, having total turnover or gross receipts of business or profession during the tax year specified in column D and computed in the manner specified in column E thereof, shall be deemed to be the profits and gains of such business or profession chargeable to tax under the head “Profits and gains of business or profession”.
Table
| Sl. No. | Specified business or profession | Assessee | Total turnover or gross receipts of business or profession during tax year | Manner of computation |
|---|---|---|---|---|
| A | B | C | D | E |
| 1 | Any business other than the business specified against serial number 2. | Eligible assessee. | (a)Does not exceed ₹2,00,00,000; or (b)does not exceed ₹3,00,00,000, where the amount or aggregate of amounts received, in cash, does not exceed 5% of the total turnover or gross receipts. | (A)(i) 6% of total turnover or gross receipts realised in specified banking or online mode; and (ii)8% of total turnover or gross receipts realised in any mode other than specified banking or online mode; or (B)profit claimed to have been actually earned, whichever is higher. |
| 2 | Business of plying, hiring or leasing goods carriage. | An assessee, who owns not more than ten goods carriages at any time during the tax year. | (a)Theaggregate ofincome from goodscarriage:— (i)being aheavy goods vehicle, calculated at the rate of ₹1,000 per ton of gross vehicle weight or unladen weight for each vehicle; or (ii)being a vehicle other than heavy goods vehicle, calculated at the rate of ₹ 7,500 for each goods carriage for every month or part of a month during which the vehicle is owned by the assessee in the tax year; or (b)income claimed to have been actually earned, whichever is higher. | |
| 3 | Any profession as referred to in section 62(1)(a). | Specified assessee. | (a)Does not exceed ₹50,00,000; or (b)does not exceed ₹75,00,000, where the amount or aggregate of amounts received in cash does not exceed 5% of the total turnover or gross receipts. | 50% of the gross receipts or profit claimed to have been actually earned, whichever is higher. |
Section 58(3) of Income Tax Act 2025
58(3)Any assessee mentioned in column C of the Table in sub-section (2), who claims that––
- (a)the profits or gains actually earned from the specified business or profession are lower than the profits or gains computed in the manner mentioned in column E of the said Table; and
- (b)whose total income exceeds the maximum amount which is not chargeable to tax,
shall be required to––
- (i)keep and maintain such books of account and other documents as required under section 62; and
- (ii)get the accounts audited and furnish a report of such audit as required under section 63.
Section 58(4) of Income Tax Act 2025
58(4) Any loss, allowance or deduction allowable under the provisions of this Act, shall not be allowed against the income computed in the manner specified in sub-section (1).
Section 58(5) of Income Tax Act 2025
58(5) For the purposes of sub-section (2) (Table: Sl. No. 2),where the assessee is a firm, the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in section 35(f).
Section 58(6) of Income Tax Act 2025
58(6) The written down value of any asset used for the purposes of specified business or profession shall be computed as if the assessee mentioned in column C of the Table in sub-section (2) had claimed and was actually allowed depreciation thereon for each of the relevant tax years.
Section 58(7) of Income Tax Act 2025
58(7) Where an eligible assessee declares profit for any tax year as per the provisions of sub-section (2) (Table: Sl. No. 1) and he declares profit for any of the five tax years succeeding such tax year in contravention of the provisions of sub-section (1), then he shall not be eligible to claim the benefit of the provisions of this section for five tax years subsequent to the tax year in which the profit has not been declared as per the provisions of the said sub-section.
Section 58(8) of Income Tax Act 2025
58(8) Irrespective of anything contained in foregoing provision of this section, where provisions of sub-section (7) are applicable to an eligible assessee and his total income exceeds the maximum amount which is not chargeable to income-tax, he shall be required to keep and maintain such books of account and other documents as required under section 62(2) and get them audited and furnish a report of such audit as required under section 63.
Section 58(9) of Income Tax Act 2025
58(9) For the purposes of sub-section (2) (Table: Sl. Nos. 1 and 3), the receipt of amount or aggregate of amounts by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the receipt in cash.
Section 58(10) of Income Tax Act 2025
58(10) In this section,––
- (a) “eligible assessee” means an individual, a Hindu undivided family, or a firm other than a limited liability partnership, who is resident in India, who––
- (i) has not claimed any deduction under section 141; or
- (ii) has not claimed any deduction under Chapter VIII-C for the relevant tax year; or
- (iii) does not carry on specified profession as defined in section 62(1)(a), and (c); or
- (iv) does not earn any income in the nature of commission or brokerage; or
- (v) does not carry on any agency business;
- (b) “specified assessee” means an individual or a firm, other than a limited liability partnership, who is a resident in India;
- (c) “limited liability partnership” shall have the same meaning as assigned to it in section 2(n) of the Limited Liability Partnership Act, 2008;
- (d) the expressions “goods carriage”, “gross vehicle weight” and “unladen weight” shall have the same meaning as respectively assigned to them in section 2 of the Motor Vehicles Act, 1988;
- (e) “heavy goods vehicle” means any goods carriage, the gross vehicle weight of which exceeds 12,000 kilograms; and
- (f) an assessee, who is in possession of a goods carriage, whether taken on hire purchase or on instalments and for which the whole or part of the amount payable is still due, shall be deemed to be the owner of such goods carriage.
FAQs on Section 58 of Income Tax Act 2025
Q1. What is the purpose of Section 58 of the Income Tax Act, 2025?
Section 58 provides a simplified method for computing profits and gains of certain businesses or professions on a presumptive basis to reduce compliance burden.
Q2. From when is Section 58 applicable?
It is applicable from 1st April 2026.
Q3. Who can opt for presumptive taxation under Section 58(1)?
Only eligible or specified assessees engaged in businesses or professions listed in the Table under Section 58(2).
Q4. What is an “eligible assessee” under this section?
An individual, Hindu Undivided Family (HUF), or a firm (not LLP), resident in India, meeting certain conditions like not claiming deductions under section 141 or Chapter VIII-C, not earning commission/brokerage income, or not carrying on agency or specified profession.
Q5. What is a “specified assessee”?
An individual or a firm (other than an LLP) resident in India.
Q6. What types of businesses are covered under the presumptive taxation scheme?
- Any business other than plying/hiring/leasing of goods carriages.
- Business of plying/hiring/leasing goods carriages.
- Specified professions under section 62(1)(a).
Q7. What is the presumptive income rate for general businesses under Sl. No. 1 of the Table?
6% of turnover/receipts via banking/online mode, or 8% for other modes, or actual income declared, whichever is higher.
Q8. What turnover limits apply to general businesses for presumptive taxation?
₹2 crores normally, or ₹3 crores if cash receipts do not exceed 5% of total receipts.
Q9. What is the presumptive income for transport businesses under Sl. No. 2 of the Table?
- ₹1,000 per ton/month for heavy goods vehicles.
- ₹7,500 per vehicle/month for other vehicles.
Or actual income, whichever is higher.
Q10. What is the presumptive income rate for specified professions under Sl. No. 3 of the Table?
50% of gross receipts or actual income earned, whichever is higher.
Q11. What turnover limits apply to specified professions?
₹50 lakhs, or ₹75 lakhs if cash receipts do not exceed 5%.
Q12. Can losses or deductions be claimed against income computed under presumptive scheme?
No, as per Section 58(4), no loss, allowance, or deduction is allowed against presumptive income.
Q13. What if an assessee wants to declare lower income than presumptive income?
They must maintain books of accounts (u/s 62) and get them audited (u/s 63) if total income exceeds the basic exemption limit.
Q14. What happens if an assessee opts out of the presumptive scheme after opting in?
If an eligible assessee declares lower income in any of the five subsequent tax years, they cannot avail the benefit of this section for five more years.
Q15. What is deemed as cash receipt under Section 58(9)?
Cheque or bank draft not account payee is considered as receipt in cash.
Q16. Are LLPs eligible for presumptive taxation?
No, LLPs are not eligible under Section 58.
Q17. Can an assessee engaged in agency business opt for presumptive taxation?
No, such assessees are excluded.
Q18. How is depreciation treated under presumptive taxation?
Written down value is computed as if depreciation was allowed, even if not actually claimed.
Q19. Can a firm deduct partner’s salary and interest under this scheme?
Yes, for transport businesses (Sl. No. 2), such deductions are allowed subject to section 35(f).
Q20. What is the treatment of assets under presumptive scheme?
Assets are treated as depreciated, whether or not depreciation is actually claimed, affecting future depreciation claims.
Q21. Who is deemed the owner of a goods carriage?
Anyone possessing it, even under hire purchase or installment with dues pending, is deemed the owner.
Q22. Are audit and books mandatory under the presumptive scheme?
Only if income declared is lower than presumptive income and total income exceeds exemption limit.
Q23. Are assessees receiving commission or brokerage eligible?
No, they are excluded from opting the presumptive scheme.
Q24. Can the scheme be used for more than one business type?
Yes, as long as each business meets the respective conditions under Section 58.
Section 58 of the Income Tax Act, 2025 introduces a streamlined presumptive taxation scheme for certain residents, effective from 1st April 2026, aimed at reducing the compliance burden for small businesses, professionals, and transport operators. It provides deemed income provisions based on a percentage of turnover or fixed rates, eliminating the need to maintain detailed books of account—subject to conditions.
However, the scheme comes with eligibility criteria, turnover thresholds, and limitations on deductions and losses. Assessees opting for it must ensure consistent compliance, as non-adherence leads to ineligibility for five subsequent tax years. Overall, it is a beneficial regime for small taxpayers seeking ease of doing business, with a balance of simplicity and accountability.
