A practising CA's fees are taxed under Profits & Gains of Business or Profession. With receipts up to ₹75 lakh a CA can use Section 44ADA and declare just 50% as income — no books, no audit. Clients deduct 10% TDS under Section 194J. A partnership/LLP CA firm pays a flat 30%; an individual CA pays at slab rates under the new regime (default) for AY 2026-27.
How Each Type of CA Is Taxed
Every common CA situation — solo, partner, firm and employed — with the tax head, rate, key provision and the right ITR form.
| Type of CA | Income Head | Tax | Key Provision | ITR |
|---|---|---|---|---|
| Solo practitioner (receipts ≤₹75L, 44ADA) | PGBP | Slab on 50% | Section 44ADA | ITR-4 |
| Solo practitioner (receipts >₹75L) | PGBP | Slab on profit | 44AB audit | ITR-3 |
| Partner in a CA firm | PGBP (remuneration + interest) | Slab rate | Section 40(b) | ITR-3 |
| CA firm (partnership / LLP) | PGBP | 30% flat | Sec 40(b) limits | ITR-5 |
| Employed CA (in industry) | Salary | Slab rate | Std deduction ₹75,000 | ITR-1 / ITR-2 |
Individual/firm figures are for AY 2026-27 (FY 2025-26). The new tax regime is the default for individuals; confirm your numbers on incometax.gov.in.
Section 44ADA — Presumptive Scheme for CAs
Chartered Accountants are named "specified professionals" under Section 44ADA (alongside doctors, lawyers, architects and engineers). If gross professional receipts are ₹75 lakh or less, a CA can declare 50% of receipts as income and skip full books of account and audit.
- Eligibility: resident individual CA or HUF with gross receipts ≤ ₹75 lakh (raised from ₹50 lakh, effective FY 2023-24; the ₹75L limit applies where cash receipts are ≤5% of turnover).
- The remaining 50% is deemed to cover all expenses — staff, rent, travel, subscriptions, depreciation — with nothing to substantiate.
- No books, no 44AB audit as long as receipts stay ≤₹75 lakh and you declare at least 50%.
- Declare income below 50% and you must maintain books and get a tax audit under Section 44AB.
44ADA on ₹50 lakh receipts
Same fees under normal books
44ADA is only worth it when your real expenses are below 50% of receipts. A lean solo practice usually saves; a firm carrying heavy salaries, office rent and articles may pay less on actual profit. Compare both before you lock in — opting out of 44ADA can bar you for five years.
Not sure whether 44ADA or actual books saves you more?
Ask a TaxClue CA →When Must a CA Keep Books & Get Audited?
| Situation | Books / Audit |
|---|---|
| Receipts ≤₹75L and 44ADA opted | No audit |
| Gross professional receipts >₹75L | 44AB audit |
| 44ADA opted but income declared <50% | Books + 44AB |
| CA firm crossing the 44AB limits | 44AB audit |
Penalty for missing a required audit (Section 271B): 0.5% of receipts, capped at ₹1,50,000.
New-Regime Slabs for a Solo CA (AY 2026-27)
The new tax regime is the default after Budget 2025. A resident individual with taxable income up to ₹12 lakh pays nil tax after the Section 87A rebate. These slabs apply to a solo CA's presumptive or actual income.
| Taxable income (new regime) | Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
87A rebate makes tax nil up to ₹12,00,000 taxable income; 4% cess applies on tax. Full slabs: see the income tax slabs guide.
New regime — default
- Lower slab rates, nil tax up to ₹12L income
- ₹75,000 standard deduction (salaried CA)
- No 80C / 80D / HRA / home-loan deductions
- Simplest for a lean solo practice
Old regime — optional
- Basic exemption ₹2.5L (₹3L senior, ₹5L super-senior)
- 80C ₹1.5L, 80D, HRA, Section 24(b) available
- 87A rebate up to ₹5L income only
- Better when deductions are large
Compare old vs new regime on your actual numbers.
Open the regime calculator →TDS on CA Fees — Section 194J (10%)
Clients who are businesses (or individuals/HUFs under tax audit) must deduct 10% TDS under Section 194J on professional fees paid to a CA. This TDS shows in the CA's Form 26AS / AIS and is claimed against the final tax liability.
- Threshold: TDS applies once payments to one CA exceed ₹30,000 in the year (from AY 2026-27 this limit is raised to ₹50,000 per Budget 2025).
- Rate: 10% on professional fees; 2% only for the technical-service portion; 20% if PAN is not furnished.
- TDS deducted reduces the advance tax a CA has to pay and is refunded if excess.
CA Firm Taxation — Flat 30%
A partnership firm or LLP of CAs is a separate taxpayer at a flat 30%, plus 12% surcharge above ₹1 crore and 4% cess (effective max ≈ 34.94%). The firm deducts partners' remuneration and interest under Section 40(b).
| Book profit slab | Max deductible remuneration |
|---|---|
| First ₹6,00,000 of book profit (or loss) | ₹3,00,000 or 90% of book profit — whichever higher |
| Balance book profit (above ₹6,00,000) | 60% of the balance |
40(b) remuneration limits were revised by Budget 2024, effective AY 2025-26; interest to partners is deductible up to 12% p.a. Partners' share of firm profit is exempt under Section 10(2A).
The firm pays 30% on its profit; the remuneration and interest it pays partners is deductible for the firm but taxable in the partners' hands at slab rates. Only the partners' profit share is exempt (Section 10(2A)) — so plan remuneration carefully to balance firm-level and partner-level tax.
GST & Advance Tax for a CA Practice
CA services are professional services taxable at 18% GST (SAC 9982). GST registration is mandatory once turnover crosses ₹20 lakh (₹10 lakh in special-category states), and for any inter-state supply regardless of turnover.
- Advance tax: due if tax after TDS exceeds ₹10,000 — 15% by 15 Jun, 45% by 15 Sep, 75% by 15 Dec, 100% by 15 Mar.
- 44ADA note: professionals on the presumptive scheme still pay advance tax, but can pay 100% in one instalment by 15 March.
- Interest: shortfalls attract 1% per month under Sections 234B and 234C.
The Income-tax Act, 2025 replaces the 1961 Act from AY 2026-27 with renumbered sections. The provisions above — 44ADA, 194J, 40(b), 87A — continue in substance; section numbers may be restated. Verify the current citation on incometax.gov.in before relying on it in filings.
Frequently Asked Questions
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