- Why the 1 April 2026 date matters
- What Section 58 covers
- Presumptive taxation for business under Sl. No. 1
- 5-year lock-in under Section 58(7)
- Goods carriage business under Sl. No. 2
- Specified profession under Sl. No. 3
- Lower-profit claims, books and tax audit triggers
- Common provisions across Section 58
- Advance tax under Section 408(2)
- Common practical mistakes
- Related DN & CO. reads
- FAQs
- Official references
Why the 1 April 2026 Date Matters
Many summaries on social media casually say “Income-tax Act, 2025” and then start applying the new section numbers to FY 2025-26. That is not the correct legal position. The official commencement provision and CBDT transition FAQ make the timeline clear. The new Act came into force on 1 April 2026. Therefore, presumptive taxation under Section 58 is the correct reference for income earned from that date onward, that is, for Tax Year 2026-27 and later years.
This distinction is not just academic. It affects section references, audit forms, advance tax reading, filing language and transition-year advice. If someone is preparing a return for income earned up to 31 March 2026, the old law still matters for that period.
What Section 58 Covers
Section 58 is the presumptive taxation provision under the new Act for three broad categories:
| Category | Who it broadly covers | Main deeming rule | Old-law equivalent |
|---|---|---|---|
| Business under Table Sl. No. 1 | Eligible resident individual, HUF or firm other than LLP | 6% / 8% of turnover or actual profit, whichever is higher | Section 44AD |
| Goods carriage business under Table Sl. No. 2 | Assessee owning not more than 10 goods carriages | ₹1,000 per ton per month for heavy vehicles or ₹7,500 per vehicle per month, or actual profit, whichever is higher | Section 44AE |
| Specified profession under Table Sl. No. 3 | Resident individual or firm other than LLP | 50% of gross receipts or actual profit, whichever is higher | Section 44ADA |
Presumptive Taxation for Business Under Sl. No. 1
This is the business category that broadly replaces old Section 44AD. It applies to an eligible assessee, which means a resident individual, resident HUF or resident firm other than LLP, subject to specific exclusions.
Who is eligible
- Resident individual
- Resident HUF
- Resident firm, excluding LLP
Who is not eligible
- A person carrying on specified profession referred to in Section 62(4)
- A person earning income in the nature of commission or brokerage
- A person carrying on agency business
- A person who has claimed deduction under Chapter VIII-C for the relevant tax year
Turnover limit
- Up to ₹2 crore in the normal case
- Up to ₹3 crore where cash receipts do not exceed 5% of total turnover or gross receipts
For better cash-discipline planning, you may also want to review DN & CO.’s article on bank transaction limits, AIS, SFT and cash rule visibility, because the 5% cash-receipt condition is simple in theory but often poorly monitored in practice.
Presumptive income rate
The law deems income as the higher of:
- 6% of turnover or gross receipts received by specified banking or online mode during the tax year or before the due date under Section 263(1), and
- 8% of the remaining turnover or gross receipts, or
- the actual profit claimed to have been earned, if higher.
Simple example
Suppose a trader has turnover of ₹1.80 crore in Tax Year 2026-27. Out of this, ₹1.20 crore is received through banking or online mode within the prescribed timeline, and ₹60 lakh is received in other modes.
- 6% of ₹1.20 crore = ₹7.20 lakh
- 8% of ₹60 lakh = ₹4.80 lakh
- Total presumptive income = ₹12 lakh
If the actual profit is ₹14 lakh, the law expects ₹14 lakh to be offered, because Section 58 works on “presumptive or actual, whichever is higher”.
5-Year Lock-in Under Section 58(7)
The lock-in rule applies only to the business category under Table Sl. No. 1. This is one of the most commercially important features of Section 58.
If an eligible assessee declares profit under this presumptive business scheme for one tax year and then, in any of the next five succeeding tax years, does not continue in accordance with the scheme, the assessee becomes ineligible to claim the benefit of this business presumptive provision for the next five tax years after the year of exit.
This is why Section 58 should not be chosen casually just because it looks easy in one year. A business with fluctuating profit margins, planned borrowings, expected scrutiny from investors or possible future audit needs should think through the lock-in consequence before opting in.
Goods Carriage Business Under Sl. No. 2
This category broadly replaces old Section 44AE. It applies to an assessee who owns not more than 10 goods carriages at any time during the tax year.
Who can use it
- There is no resident-only restriction built into this table entry
- It is not limited to individuals or firms alone
- The critical condition is the ownership cap of not more than 10 goods carriages at any time during the year
Deemed ownership rule
If a goods carriage is held on hire purchase or instalment and any amount remains payable, the assessee is deemed to be the owner for this purpose.
Presumptive income for goods carriage business
- For a heavy goods vehicle with gross vehicle weight exceeding 12,000 kg: ₹1,000 per ton per month of gross vehicle weight or unladen weight, as applicable
- For other goods carriages: ₹7,500 per vehicle per month
- Part of a month is treated as a full month
- If actual profit is higher, the higher amount should be disclosed
Simple example
Assume an assessee owns two light goods vehicles for the whole year and one heavy goods vehicle of 16 tons for 8 months.
- Two light vehicles: 2 × ₹7,500 × 12 = ₹1,80,000
- One heavy vehicle: 16 × ₹1,000 × 8 = ₹1,28,000
- Total presumptive income = ₹3,08,000, unless actual profit is higher
Special benefit for partnership firms
If the assessee is a firm, salary and interest paid to partners can be deducted separately from the presumptive income, subject to the conditions and limits of Section 35(e). This is a major distinction from the regular business presumptive entry.
No lock-in rule here
Section 58(7) lock-in does not apply to the goods carriage category.
Specified Profession Under Sl. No. 3
This category broadly replaces old Section 44ADA. It applies to a specified assessee, meaning a resident individual or a resident firm other than LLP, carrying on a specified profession referred to in Section 62(4).
Specified professions covered
- Legal
- Medical
- Engineering
- Architectural
- Accountancy
- Technical consultancy
- Interior decoration
- Information technology
- Company secretary
- Any other profession notified by the Board
Gross receipts limit
- Up to ₹50 lakh in the normal case
- Up to ₹75 lakh where cash receipts do not exceed 5% of total gross receipts
Presumptive income
- 50% of gross receipts, or
- actual profit, whichever is higher
Example
A resident architect has gross receipts of ₹42 lakh during Tax Year 2026-27. Under Section 58, the deemed professional income would ordinarily be ₹21 lakh. If actual professional profit is ₹24 lakh, then ₹24 lakh should be offered.
No 5-year lock-in for profession
The 5-year lock-in rule does not apply to the specified profession category. That gives professionals more flexibility than the business entry under Sl. No. 1.
Lower-Profit Claims, Books and Tax Audit Triggers
Section 58 should never be read as “once eligible, audit can be ignored forever”. The audit and books consequence becomes relevant the moment the assessee claims lower profits than the deemed figure while total income exceeds the maximum amount not chargeable to tax.
Core trigger under Section 58(3)
- The assessee claims actual profits lower than the presumptive amount under the relevant table entry, and
- the total income exceeds the maximum amount not chargeable to tax
In such a case, the assessee is required to:
- maintain books of account as required under Section 62, and
- get accounts audited and furnish audit report as required under Section 63
Separate consequence for business lock-in cases
In the business presumptive category under Sl. No. 1, Section 58(8) creates another important consequence. Where the 5-year lock-in disqualification applies and the total income exceeds the maximum amount not chargeable to income-tax, books and audit obligations follow.
For broader transition context on new reporting forms, see DN & CO.’s guide on new income-tax forms, including Form 26 under Section 63.
Common Provisions Across Section 58
Beyond the category-specific rules, some common principles run through Section 58.
| Point | Practical meaning |
|---|---|
| Sections 26 to 54 overridden to the extent contrary | The special presumptive computation overrides normal business-profit computation where inconsistent |
| No separate deduction for loss, allowance or deduction against presumptive income | Normal expense-by-expense deduction is not separately allowed against the income computed under Section 58 |
| Depreciation deemed to have been allowed | WDV must be adjusted as if depreciation was actually claimed and allowed |
| Non-account payee cheque or bank draft treated as cash receipt | This matters for the 5% cash threshold in the business and profession entries |
| Higher actual income must still be offered | Presumptive taxation is a floor simplification, not a license to understate profit |
Advance Tax Under Section 408(2)
Advance tax is one area where broad summaries often overstate the rule. The official text of Section 408(2) says that an assessee declaring profits and gains as per Section 58(2) Table Sl. No. 1 or 3 shall pay the whole amount of advance tax on current income on or before 15 March of the financial year.
So, from a technical reading of the Act, the safer professional position is:
- Business presumptive taxpayers under Sl. No. 1: full advance tax by 15 March
- Specified profession presumptive taxpayers under Sl. No. 3: full advance tax by 15 March
- Goods carriage taxpayers under Sl. No. 2: do not assume automatic inclusion without checking the exact statutory and portal position applicable to the year
For a detailed practical payment guide, see DN & CO.’s article on advance tax under the Income-tax Act, 2025.
Common Practical Mistakes Under Section 58
- Treating Section 58 as applicable to FY 2025-26 even though the new Act applies from 1 April 2026
- Assuming every person with small turnover can opt in, without checking commission, brokerage, agency and profession exclusions
- Ignoring the 5% cash-receipt test while trying to use the higher turnover threshold
- Forgetting that non-account payee cheque or draft is treated as cash receipt for this purpose
- Assuming the 5-year lock-in applies to all categories, when it applies only to business under Sl. No. 1
- Assuming the single-instalment advance tax rule automatically covers goods carriage cases as well
- Offering presumptive income even when actual profit is clearly higher
- Ignoring WDV impact because depreciation is deemed to have been allowed
Related DN & CO. Reads
- Advance Tax for Tax Year 2026-27: Due Dates, Sections 403 to 410 and Practical Payment Guide
- New Income Tax Forms 2026: Old vs New Forms Mapping Guide
- Bank Transaction Limits 2026: PAN, AIS, SFT and Cash Rule Guide
- TDS Rate Chart FY 2026-27: Latest Section-wise TDS Rates and Compliance Rules
- Form No. 121 Explained: Practical No-TDS Guidance Under the New Law
Frequently Asked Questions
1. Does Section 58 apply to FY 2025-26?
No. Section 58 belongs to the Income-tax Act, 2025, which came into force on 1 April 2026. For income up to 31 March 2026, the old provisions continue to matter.
2. Is the old Section 144-related restriction still part of eligibility for business presumptive taxation?
No. The official current text of Section 58 shows that the earlier clause linked to Section 144 was omitted by the Finance Act, 2026 with effect from 1 April 2026.
3. Can an LLP opt for presumptive taxation under Section 58 business or profession entries?
No. Both the business and specified profession entries exclude LLPs.
4. Does the 5-year lock-in apply to professionals?
No. The lock-in rule is relevant only to the business presumptive category under Table Sl. No. 1.
5. Is goods carriage presumptive taxation available only to residents?
The table entry itself is not drafted as a resident-only provision in the same way as the business and profession entries. The ownership cap of not more than 10 goods carriages is the key condition.
6. If actual profit is higher than the deemed rate, can lower presumptive income still be offered?
No. Section 58 works on the higher of the presumptive figure or actual profit claimed to have been earned.
7. Is the one-instalment advance tax rule applicable to all three Section 58 categories?
The statutory text of Section 408(2) specifically refers to Section 58(2) Table Sl. No. 1 and 3. Therefore, it should not be casually expanded to all three categories without careful reading.
8. What happens if profits lower than presumptive income are declared?
Where the total income exceeds the maximum amount not chargeable to tax, books of account and tax audit obligations are triggered under Section 58 read with Sections 62 and 63.
Official References
- Income-tax Act, 2025 – Section 1 for commencement from 1 April 2026.
- Income-tax Act, 2025 – Section 58 for the statutory presumptive taxation text.
- Income-tax Act, 2025 – Section 408(2) for the advance tax rule applicable to presumptive cases specifically named there.
- Income-tax Act, 2025 as amended by Finance Act, 2026 for the updated consolidated legal text, including Section 62 and Section 63 references.
- CBDT Updated FAQs on Interplay and Transition for transition-year clarifications and new-law payment references.
- CBDT press release dated 1 April 2026 confirming that the Income-tax Act, 2025 came into force on 1 April 2026.
- Guidance Note on Form No. 26 for audit-report context under Section 63 and the new rules framework.
Final Takeaway
Section 58 is one of the most useful simplification provisions in the new income-tax law, but it works well only when used with discipline. The real compliance risk is not in calculating 6%, 8% or 50%. The real risk lies in choosing the wrong category, ignoring the cash threshold, overlooking the lock-in, misreading the advance tax rule or assuming that lower-profit claims can be made without books and audit consequences.
For small taxpayers, the smartest way to use Section 58 is to treat it as a structured compliance decision, not just a shortcut.