Section 58 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 58 lets certain resident assessees pay tax on a presumed profit, computed as a fixed share of turnover or gross receipts, instead of keeping full books. This article explains the section as per the Income-tax Act, 2025 as amended by the Finance Act, 2026, including the Table, the audit consequences and the five-year lock-out.
Section 58(2) has a Table with three cases: (1) an eligible assessee in business, with turnover not above two crore rupees (or three crore rupees where cash receipts do not exceed 5%); (2) a person owning not more than ten goods carriages; (3) a specified assessee in a specified profession, with gross receipts not above fifty lakh rupees (or seventy-five lakh rupees with cash receipts within 5%). Profit is deemed to be the amount in column E, being the higher figure in each case. Claiming a lower profit while income exceeds the basic exemption limit brings books and audit under sections 62 and 63. Later amendments, rules and notifications should be checked.
What section 58(1) does
Sections 26 to 54 stop applying, to the extent contrary to section 58, to the manner of computing the profits and gains of the specified business or profession in sub-section (2). The amounts so computed are deemed to be the profits and gains of that business or profession chargeable under the head "Profits and gains of business or profession". The ordinary rules still matter for the remaining parts of those sections; for example, section 26 is where business income is charged. Once you know which case applies, the result flows into your income tax return filing.
The Table in section 58(2)
| Serial no. | Specified business or profession | Assessee | Turnover or gross receipts in the tax year | Manner of computation |
|---|---|---|---|---|
| 1 | Any business other than the business in serial number 2 | Eligible assessee | (a) does not exceed two crore rupees; or (b) does not exceed three crore rupees, where the amount or aggregate of amounts received in cash does not exceed 5% of total turnover or gross receipts | (A) the aggregate of (i) 6% of total turnover or gross receipts 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, and (ii) 8% of the remaining total turnover or gross receipts (after reducing the amount covered in (i)); or (B) profit claimed to have been actually earned, whichever is higher |
| 2 | Business of plying, hiring or leasing goods carriage | An assessee who owns not more than ten goods carriages at any time during the tax year | No turnover limit is printed in column D | (A) the aggregate of income from goods carriage: (i) for a heavy goods vehicle, Rs. 1,000 per ton of gross vehicle weight or unladen weight, as the case may be, for each vehicle for every month or part of a month during which it is owned in the tax year; (ii) for a vehicle other than a heavy goods vehicle, Rs. 7,500 for each goods carriage for every month or part of a month during which it is owned in the tax year; or (B) profit claimed to have been actually earned, whichever is higher |
| 3 | Specified profession as referred to in section 62(4) | Specified assessee | (a) does not exceed fifty lakh rupees; or (b) does not exceed seventy-five lakh rupees, where the amount or aggregate of amounts received in cash does not exceed 5% of the gross receipts | 50% of the gross receipts or profit claimed to have been actually earned, whichever is higher |
"Specified banking or online mode" is quoted as the Act prints it; the text at this section does not spell the term out beyond those words, so check how the Act or rules define it.
Who is covered: section 58(11)
- Eligible assessee: an individual, a Hindu undivided family, or a firm other than a limited liability partnership, who is resident in India and who (ii) has not claimed any deduction under Chapter VIII-C for the relevant tax year, (iii) does not carry on a specified profession as defined in section 62(4), (iv) does not earn any income in the nature of commission or brokerage, and (v) does not carry on any agency business.
- Specified assessee: an individual or a firm, other than a limited liability partnership, who is a resident in India.
- Other terms: "limited liability partnership" has the meaning in section 2(1)(n) of the Limited Liability Partnership Act, 2008 (6 of 2009); "goods carriage", "gross vehicle weight" and "unladen weight" have the meanings in section 2 of the Motor Vehicles Act, 1988 (59 of 1988). A "heavy goods vehicle" is a goods carriage whose gross vehicle weight exceeds 12,000 kilograms. An assessee in possession of a goods carriage taken on hire purchase or instalments, with an amount still due, is deemed the owner.
The Finance Act, 2026, w.e.f. 1-4-2026, omitted sub-clause (i) of section 58(11)(a), which had been a condition about a deduction under section 144; the sub-clauses (ii) to (v) remain as printed (the printed copy keeps the numbering and shows the omitted place as a gap). Check the other laws named above for their own definitions.
Consequences and rules
- Section 58(3): an assessee in column C who claims that the profits actually earned are lower than the column E figure, and whose total income exceeds the maximum amount not chargeable to tax, must keep and maintain books of account and other documents as required under section 62 and get the accounts audited and furnish the audit report as required under section 63.
- Section 58(4): no loss, allowance or deduction under the Act is allowed against the income computed under sub-section (2).
- Section 58(5): for serial number 2, where the assessee is a firm, the salary and interest paid to partners are deducted from the income computed, subject to the conditions and limits in section 35(e).
- Section 58(6): the written down value of any asset used in the specified business or profession is computed as if the assessee had claimed and been allowed depreciation for each relevant tax year. See depreciation under section 33 and written down value under section 41.
- Section 58(7): if an eligible assessee declares profit under serial number 1 for a tax year and then declares profit for any of the five succeeding tax years in contravention of sub-section (1), he is not eligible for the benefit of this section for five tax years after the tax year in which the profit was not declared as the sub-section requires.
- Section 58(8): where sub-section (7) applies and the total income exceeds the maximum amount not chargeable to income-tax, he must keep books and get them audited under sections 62 and 63.
- Section 58(9): for serial numbers 1 and 3, receipt by a cheque or bank draft that is not account payee is deemed to be receipt in cash.
- Section 58(10): sections 62 and 63 do not apply to the business in serial number 2, and in computing the monetary limits under those sections, the gross receipts or income of that business are excluded.
Worked example
The names and amounts are assumed. Neha runs a trading business and is an eligible assessee. Her turnover is Rs. 1,50,00,000 for the tax year, below the two crore rupee limit. Of this, Rs. 1,00,00,000 was received by specified banking or online mode within the stated time; the rest, Rs. 50,00,000, was not.
- 6% of Rs. 1,00,00,000 = Rs. 6,00,000
- 8% of Rs. 50,00,000 = Rs. 4,00,000
- Aggregate = Rs. 10,00,000
If she claims actual profit of Rs. 9,00,000, the higher figure, Rs. 10,00,000, is the profit. If she claims Rs. 12,00,000, that is higher, so the figure is Rs. 12,00,000.
Rajan owns two goods carriages all through the tax year: one heavy goods vehicle of gross vehicle weight 16 tons and one other goods carriage for 8 months.
- Heavy goods vehicle: Rs. 1,000 x 16 tons x 12 months = Rs. 1,92,000
- Other vehicle: Rs. 7,500 x 8 months = Rs. 60,000
- Aggregate = Rs. 2,52,000, or the actual profit claimed if higher.
Common mistakes
- Using the three crore rupee or seventy-five lakh rupee limit without testing the 5% cash condition.
- Treating a non-account-payee cheque as a non-cash receipt. Section 58(9) deems it cash.
- Declaring a lower profit in a later year without noticing the five-year lock-out in section 58(7).
- Applying section 62 and 63 limits to goods carriage business, which section 58(10) excludes.
Need help choosing the scheme?
The choice between the presumptive route and full books affects your audit, deductions and later years. Our team can compare the options under tax planning advisory, and set up your records through books of accounts compliance.
Key takeaways
- Three cases in the Table: eligible assessee in business, goods carriage owner (ten or fewer), specified assessee in a specified profession.
- Profit is the higher of the presumed figure and the profit claimed to have been actually earned.
- A lower claim above the exemption limit triggers books and audit.
- Section 58(7) bars the scheme for five tax years after a non-compliant declaration.
- The Finance Act, 2026 omitted section 58(11)(a)(i), w.e.f. 1-4-2026.
Read next
- Section 26: business and professional income
- Section 62: who must maintain books of account
- Section 63: tax audit
- Section 61: presumptive income of non-residents
- Where the earlier Act's presumptive business provision sits in the 2025 Act
- Chapter IV: computation of total income
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.