Business Income Tax Planning: A Practical Guide for Tax Year 2026-27
At a Glance
| Parameter | Details for Tax Year 2026-27 |
|---|---|
| Presumptive tax — business (Section 44AD / Section 58) | 8% of turnover (6% for digital receipts) — if turnover ≤ ₹3 crore |
| Presumptive tax — profession (Section 44ADA / Section 59) | 50% of gross receipts — if gross receipts ≤ ₹75 lakh |
| Tax audit threshold — business (Section 44AB / Section 63) | Turnover > ₹1 crore (₹10 crore if >95% digital) |
| Tax audit threshold — profession | Gross receipts > ₹50 lakh |
| New regime for business | Available — but switch-back to old regime allowed only once |
| MSME payment disallowance — Section 43B(h) | Applies from AY 2024-25 — outstanding to Micro/Small MSME beyond 15/45 days |
| Depreciation — Section 32 / Section 33 (IT Act 2025) | Straight-line and written-down value methods — based on block of assets |
| Section 80-IC — hilly state incentives | Deduction for units in specified states (Himachal Pradesh, Uttarakhand, etc.) |
| Section 35D — preliminary expenses | Amortised over 5 years |
| Advance tax for business | Four instalments: 15 June, 15 September, 15 December, 15 March |
Presumptive Taxation — The Most Underused Planning Tool
Sections 44AD and 44ADA are among the most valuable provisions for small business owners and professionals. They allow income to be presumed at a fixed percentage of turnover — eliminating the need to maintain detailed books and undergo tax audit.
Section 44AD — For Small Businesses:
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