I have pension and professional income as a consultant, should I file ITR under Section 44ADA to reduce income tax?

These are a set of queries raised by ET Wealth readers, which have been answered by our panel of experts.

After retiring from a public sector bank, I transitioned to teaching at various MBA institutes in Mumbai and also work as a consultant with banks and related organisations. In addition to my professional income, I receive a pension from my former employer. I have been filing my income-tax returns in the standard manner. Some friends have now suggested that I should, instead, file my returns under Section 44ADA of the Income-tax Act to potentially reduce my tax liability. Please advise.

Amit Maheshwari Tax Partner, AKM Global: Given your professional engagements, you could opt for the presumptive taxation scheme under Section 44ADA of the Income-tax Act 1961. This scheme applies to specified professionals, such as those in law, medicine and consultancy, with gross receipts of up to `75 lakh per year (with cash receipts limited to 5%). Under this scheme, you can declare 50% of your gross receipts as business income, simplifying tax compliance by eliminating the need to maintain detailed accounts. If your receipts are below `75 lakh, you can file your return using ITR Form 4 (Sugam). However, no additional deductions for business expenses are allowed. Also, your pension will be considered salary income and should be reported under the head ‘Income from salary’ in the ITR.

Also read | Can I stop working as I will have Rs 1.6 crore corpus in 18 months and monthly expenses of Rs 65,000?


I am a state government employee and my gross salary for 2024-25 was Rs 20 lakh. I also have investments in shares and mutual funds. I have submitted the tax deducted at source (TDS) based on my salary. While filing my income tax return (ITR), I need to determine which form (ITR 1 or ITR 2) to use for incorporating the income from mutual funds and shares. Please clarify.

Shubham Agrawal Senior Taxation Adviser, TaxFile.in: You are eligible to file your return using the ITR 1 form if your income consists of annual salary below `50 lakh, income from one house property, and other sources, such as interest earnings, dividends from stocks, or other passive income. This form is meant for individuals with relatively straightforward income sources and no significant capital gains. However, if your income from stocks and mutual funds includes proceeds from the sale of these investments in any given financial year, you will need to file the return using ITR 2 form to report the resulting capital gain or loss. The key factor necessitating the use of ITR 2 is the actual sale of these assets, leading to capital gain or loss, which must be reported accordingly. If you have further complexities in your income structure, it may be advisable to consult a tax professional to ensure compliance with the income tax filing norms.

Our panel of experts will answer questions related to any aspect of personal finance. If you have a query, mail it to us right away. Email ID: etwealth@timesgroup.com