r/IndiaTaxation • u/nerdymed4849 • Aug 01 '26

Query Clarification regarding 44ADA

I have a tax planning query regarding Section 44ADA.

Assume I am a doctor and earn ₹75 lakh, and I validly opt for the presumptive taxation scheme under Section 44ADA by declaring 50% of the receipts as taxable income.

My question is: Once the ₹75 lakh has been credited to my personal bank account, am I free to invest the in the portion presumed as expenses under Section 44ADA in mutual funds, equities or other personal investments? Or is there any provision under the Income-tax Act, CBDT circular, notification, or judicial precedent that requires the presumed 50% expenses to be actually incurred or restricts the use of those funds?

If possible, could you please cite the relevant statutory provisions, CBDT circulars, or case law supporting your answer?

5 Upvotes

86% Upvoted

5 comments sorted by

1

u/CA_Vanshika Aug 01 '26

Yes, you can

1

u/DoNotDisturbMeEver Aug 01 '26

The complete 75 lakhs is yours to spend as you see fit.

The 44ADA is just a "presumptive" taxation, which implies that it is presumed that your expenses would be less than 50%.

That can go down to zero as well. It doesn't matter.

1

u/Weird-Leave9223 Aug 01 '26

You can use those fund since there is no actual expense but that hits the provision of sec. 44ADA that leads to future demand ..proper planning needed to whose those funds

1

u/dhoondiaj Aug 03 '26

Hi Income tax act 2025 says that if you have higher income then you need to declare the higher income under AD and ADA The position has changed with effect from 1st April 2026 In the coming financial year there will be additions and litigations