Check if you qualify for presumptive taxation under Section 44AD and estimate your tax at 6% or 8% of turnover — without maintaining detailed books of accounts.
Section 44AD allows eligible small businesses and traders to declare income at 6% or 8% of turnover without maintaining books. Turnover limit: ₹3 crore for FY 2025-26.
Business Type
For traders: use absolute profit method for F&O
100% digital = 6% rate; else 8% rate applies
Eligible for Section 44AD
Presumptive rate: 8% of turnover — declare ₹₹4,00,000 as income
Presumptive Income (8%)
₹4,00,000
Tax on this: ₹5,200
Actual Profit
₹3,00,000
Tax on this: ₹0
Tax Difference
₹5,200
44AD saves tax vs actual profit basis
Key 44AD Conditions
HOW IT WORKS
Input gross turnover and the percentage received via digital payments.
Add your actual profit for comparison with the presumptive method.
Know if you qualify, the presumptive tax, and whether 44AD saves or costs you more tax.
FAQ
F&O trading income is treated as non-speculative business income. However, SEBI-registered stock brokers and sub-brokers are excluded from 44AD. A regular F&O trader who is not a SEBI-registered entity may be eligible — but this is debated. Consult a CA for your specific case.
8% of gross turnover for cash receipts. If 100% receipts are via digital payments (bank transfer, UPI, etc.), the rate is 6%. For traders, the presumptive income is on the absolute profit (sum of all profits + losses) as the turnover base.
Yes, but if your declared income is below the presumptive rate and your turnover exceeds ₹1 crore (or ₹3 crore with digital receipts), you must get a tax audit under Section 44AB, defeating the purpose of 44AD.
If you opt out of 44AD after claiming it in a year, you cannot claim 44AD again for the next 5 years. Think carefully before opting in or out.
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