Section 58 — Special provision for computing profits and gains of business or profession on presumptive basis in case of certain residents. Successor to s.44AA, s.44AB, s.44AD, s.44ADA, s.44AE of the 1961 Act.
Section 58 is in Chapter IV — Computation of Total Income, which runs from section 13 to section 95.
Sub-section (1) displaces sections 26 to 54 to the extent they are contrary to this section, for computing the profits of a specified business or profession in sub-section (2).
Sub-section (2) carries the scheme in a Table with five columns — the specified business or profession (B), the assessee who may use it (C), the turnover or gross receipts limit (D) and the manner of computation (E). Entry 1 covers any business other than goods carriage, run by an "eligible assessee", where turnover does not exceed two crore rupees, or three crore rupees where cash receipts do not exceed 5% of total turnover or gross receipts; income is the higher of the profit actually claimed to have been earned and the aggregate of 6% of turnover received by specified banking or online mode during the tax year or before the section 263(1) due date and 8% of the balance turnover. Entry 2 covers the business of plying, hiring or leasing goods carriages by an assessee owning not more than ten goods carriages at any time in the year, with no turnover limit; income is the higher of the profit actually claimed and the aggregate of Rs. 1,000 per ton of gross vehicle weight or unladen weight per month or part month for a heavy goods vehicle and Rs. 7,500 per month or part month for any other goods carriage. Entry 3 covers a specified profession under section 62(4) carried on by a "specified assessee" with gross receipts not exceeding fifty lakh rupees, or seventy-five lakh rupees where cash receipts do not exceed 5% of gross receipts; income is the higher of 50% of gross receipts and the profit actually claimed.
Sub-section (3) requires an assessee who claims profits lower than the column E figure and whose total income exceeds the maximum amount not chargeable to tax to keep books under section 62 and to get the accounts audited and furnish the report under section 63. Sub-section (4) bars any loss, allowance or deduction otherwise allowable under the Act against income computed under sub-section (2). Sub-section (5) allows a firm under Table Sl. No. 2 to deduct salary and interest paid to its partners, subject to the conditions and limits in section 35(e). Sub-section (6) computes written down value as if depreciation had been claimed and actually allowed for each relevant year.
Sub-section (7) is the lock-out: an eligible assessee who declares profit under Table Sl. No. 1 and then, in any of the five succeeding tax years, declares profit in contravention of sub-section (1) loses the benefit of the section for five tax years after the year of non-declaration. Sub-section (8) requires that assessee, if total income exceeds the maximum amount not chargeable to tax, to keep books under section 62 and get them audited under section 63. Sub-section (9) deems receipt by a cheque or bank draft that is not account payee to be receipt in cash for Table Sl. Nos. 1 and 3. Sub-section (10) disapplies sections 62 and 63 for the goods carriage business in Table Sl. No. 2 and excludes its gross receipts or income when computing the monetary limits under those sections.
Sub-section (11) defines the terms. An "eligible assessee" is a resident individual, Hindu undivided family, or firm other than a limited liability partnership who has not claimed a Chapter VIII-C deduction for the year, does not carry on a specified profession under section 62(4), earns no commission or brokerage income and carries on no agency business — sub-clause (i), which had also required that no deduction under section 144 be claimed, was omitted by Act No. 4 of 2026 with effect from 1 April 2026. A "specified assessee" is a resident individual or firm other than a limited liability partnership. A "heavy goods vehicle" is a goods carriage with gross vehicle weight exceeding 12,000 kilograms, and a person in possession of a goods carriage on hire purchase or instalments with amounts still due is deemed its owner.
Small businesses and professionals are offered a deemed profit in place of books, audit and computation, and the Act buys that simplicity with a rate high enough that the concession is not free. The two-tier turnover limits and the 6%-versus-8% split reward receipts that come through banking channels; sub-section (9) stops the reward being manufactured with cheques that are not account payee. Sub-section (7) prevents the scheme being used as a switch, entered in a good year and abandoned in a bad one.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Turnover limit for a business under Table Sl. No. 1 | Two crore rupees | Total turnover or gross receipts of the business during the tax year; raised to three crore rupees under clause (b) | Sub-section (2), Table Sl. No. 1, column D(a) |
| Raised turnover limit for a business | Three crore rupees | Only where the amount or aggregate of amounts received in cash does not exceed 5% of the total turnover or gross receipts | Sub-section (2), Table Sl. No. 1, column D(b) |
| Deemed profit on banked turnover | 6% of total turnover or gross receipts | So much as is received by specified banking or online mode during the tax year or before the due date specified in section 263(1) for that tax year | Sub-section (2), Table Sl. No. 1, column E(A)(i) |
| Deemed profit on the balance of turnover | 8% of total turnover or gross receipts as reduced by the turnover covered at 6% | The aggregate of the two is compared with the profit claimed to have been actually earned, and the higher is taken | Sub-section (2), Table Sl. No. 1, column E(A)(ii) and (B) |
| Ownership limit for the goods carriage scheme | Not more than ten goods carriages | At any time during the tax year; possession on hire purchase or instalments counts as ownership under sub-section (11)(f) | Sub-section (2), Table Sl. No. 2, column C |
| Deemed income for a heavy goods vehicle | Rs. 1,000 per ton of gross vehicle weight or unladen weight, for each vehicle, for every month or part of a month | For every month or part month during which the vehicle is owned by the assessee in the tax year | Sub-section (2), Table Sl. No. 2, column E(A)(i) |
| Deemed income for a goods carriage other than a heavy goods vehicle | Rs. 7,500 for each goods carriage for every month or part of a month | For every month or part month during which the vehicle is owned by the assessee in the tax year | Sub-section (2), Table Sl. No. 2, column E(A)(ii) |
| Gross vehicle weight making a goods carriage a heavy goods vehicle | Exceeding 12,000 kilograms | Definition of "heavy goods vehicle" | Sub-section (11)(e) |
| Gross receipts limit for a specified profession | Fifty lakh rupees | Gross receipts of the profession during the tax year; raised to seventy-five lakh rupees under clause (b) | Sub-section (2), Table Sl. No. 3, column D(a) |
| Raised gross receipts limit for a specified profession | Seventy-five lakh rupees | Only where the amount or aggregate of amounts received in cash does not exceed 5% of the gross receipts | Sub-section (2), Table Sl. No. 3, column D(b) |
| Deemed profit of a specified profession | 50% of the gross receipts | Or the profit claimed to have been actually earned, whichever is higher | Sub-section (2), Table Sl. No. 3, column E |
| Lock-out after declaring profit otherwise than under the scheme | Five tax years | Applies where an eligible assessee who declared under Table Sl. No. 1 declares, in any of the five succeeding tax years, in contravention of sub-section (1); counted from the year in which profit was not so declared | Sub-section (7) |
The deemed figure is a floor, not a ceiling: in every Table entry column E takes the higher of the computed percentage and the profit actually claimed, so declaring a real profit above the percentage is the section working normally, not an exit from it. Going below it is the expensive move — sub-section (3) then forces books under section 62 and an audit under section 63 once total income exceeds the maximum amount not chargeable to tax, and under sub-section (7) an eligible assessee who steps outside the scheme in any of the five following years is barred from it for five further years. Watch the cash tests: for Table Sl. Nos. 1 and 3 the higher limit depends on cash receipts staying within 5%, and sub-section (9) counts a cheque or bank draft that is not account payee as cash, which can pull turnover back to two crore or fifty lakh. Sub-section (4) is absolute — no loss, allowance or deduction runs against the deemed income — and sub-section (6) still writes down the assets as though depreciation had been claimed and allowed, so the block is smaller when the assessee eventually leaves the scheme. The goods carriage entry stands apart: no turnover limit, a per-vehicle per-month computation, a partner salary and interest deduction under sub-section (5) subject to section 35(e), and sections 62 and 63 switched off by sub-section (10).
A resident firm, not a limited liability partnership, has turnover of Rs. 2.4 crore in a tax year, of which Rs. 8 lakh was received in cash — under 5% of turnover — so the three crore limit in column D(b) applies and the scheme is open. Rs. 2.2 crore came in by specified banking or online mode before the section 263(1) due date, so the deemed profit is 6% of Rs. 2.2 crore plus 8% of the remaining Rs. 20 lakh, that is Rs. 13.2 lakh plus Rs. 1.6 lakh, Rs. 14.8 lakh — and if the firm's actual claimed profit were Rs. 18 lakh, that higher figure is taxed instead. Had a further Rs. 5 lakh been received by cheques that were not account payee, sub-section (9) would deem those to be cash, taking cash receipts past 5% and dropping the firm back to the two crore limit, outside the scheme altogether.
You meet it in the return itself, in the presumptive schedule where turnover, banked receipts and the deemed profit are declared, and in the section 63 audit report that becomes compulsory once you claim less. It also surfaces in a notice questioning whether the ten-vehicle or turnover condition was met, and in the advance tax working, since section 425(3) gives a Table Sl. No. 1 or 3 declarant a single 15 March instalment.
6% of total turnover or gross receipts which is received by specified banking or online mode during the tax year or before the due date specified in section 263(1)in respect of that tax year
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 (2).
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
| 1961 provision | What changed in the move |
|---|---|
| s.44AD | 1. Three sections become one Table, so the audit, books, lock-out and deduction-bar rules that were repeated in ss.44AD, 44ADA and 44AE are now written once and apply across all three rows. 2. That has a substantive effect on the goods-carriage scheme: s.44AE(7) required books and audit whenever a lower profit was claimed, with no income condition, whereas s.58(3) applies the books-and-audit requirement to every row only where the assessee also has total income exceeding the maximum amount not chargeable to tax. 3. The bar on other deductions widens. S.44AD(2) deemed only 'any deduction allowable under the provisions of sections 30 to 38' to have been given full effect; s.58(4) says 'any loss, allowance or deduction allowable under the provisions of this Act' shall not be allowed. The partner salary and interest deduction survives only for row 2, by s.58(5). 4. The non obstante clause is re-pointed from 'sections 28 to 43C' to 'sections 26 to 54, to the extent contrary to this section'. 5. The disqualification for having claimed s.10A, 10AA, 10B or 10BA relief is gone - the corresponding clause in s.58(11)(a)(i) has been omitted, leaving only the Chapter VIII-C bar. 6. The rates, the turnover ceilings, the ten-vehicle limit, the 12,000 kg heavy-goods-vehicle line and the 5% cash tests are all unchanged in figure. 7. The 'whichever is higher' comparison is now written into every row of column E, where s.44AD expressed it as 'or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned'. |
How we established this. Read s.58 of the 2025 Act against s.44AD of the 1961 Act. The scheme is recognisable element by element. S.44AD(1) deemed 'a sum equal to eight per cent of the total turnover or gross receipts ... Or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee' to be the profits, with a proviso substituting six per cent for so much of the turnover 'which is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed during the previous year or before the due date specified in sub-section (1) of section 139'. Column E of row 1 of s.58(2) states the same two rates and the same timing condition, expressed as an aggregate of the 6% part and the 8% balance, and then the same comparison with the profit actually earned. The definition of 'eligible business' in the Explanation to s.44AD - turnover not exceeding two crore rupees, three crore where cash receipts do not exceed five per cent, with a non-account-payee instrument deemed to be cash - reappears as column D of row 1 and s.58(9). The definition of 'eligible assessee' (resident individual, HUF or partnership firm, not an llp as defined in s.2(1)(n) of the llp Act, 2008) reappears in s.58(11)(a) with the same llp cross-reference. S.44AD(3) (deemed depreciation) becomes s.58(6); s.44AD(4) (five-year lock-out) becomes s.58(7); s.44AD(5) (books and audit) becomes s.58(8); the exclusions in s.44AD(6) for a profession, for commission or brokerage income and for agency business become conditions (iii), (iv) and (v) of the definition of eligible assessee in s.58(11)(a). Rows 2 and 3 of the same Table reproduce s.44AE (Rs. 1,000 per ton for a heavy goods vehicle, Rs. 7,500 otherwise, ten-vehicle limit, 12,000 kg definition, hire-purchase deeming) and s.44ADA (fifty lakh, seventy-five lakh on the 5% test, 50% of gross receipts) respectively.
See every circular and notification on this section, or the circulars index.
See every circular and notification on this section, or the notifications index.
