Presumptive taxation (44AD) for e-commerce sellers
If your turnover is within the limit, 44AD can make income tax dramatically simpler. Here's who qualifies and how it works.
Section 44AD is a scheme that lets eligible small businesses declare a presumptive profit instead of maintaining detailed books and getting audited. For many online sellers it's a huge simplification.
How 44AD works
You declare 8% of turnover as profit — or 6% for the portion received digitally (bank, UPI, marketplace settlements). Since most e-commerce receipts are digital, the 6% rate often applies to the bulk of your sales.
Who's eligible
- Resident individuals, HUFs and partnership firms (not LLPs or companies).
- Turnover up to ₹2 crore (₹3 crore where cash receipts are within limits).
- Not claiming certain special deductions.
- Engaged in eligible business (most trading/selling qualifies).
The trade-offs
- No need to maintain detailed books or get a tax audit (within limits).
- Simple, predictable tax based on turnover.
- But you can't separately claim expenses below the presumptive rate.
- If you opt out within five years, lock-in rules apply.
Estimate the tax
Apply 6%/8% to turnover to get presumptive profit, then run it through the Income Tax Calculator to see your liability and whether advance tax applies.
GST is separate
44AD is an income-tax scheme. Your GST obligations — registration, returns, multi-state registration — are unaffected.
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What profit rate applies under 44AD?
8% of turnover generally, or 6% for digitally received turnover such as bank, UPI and marketplace settlements.
Can LLPs use 44AD?
No. 44AD is available to resident individuals, HUFs and partnership firms, but not LLPs or companies.
Does 44AD remove my GST obligations?
No. 44AD only simplifies income tax. GST registration and returns continue as normal.
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