Freelancer taxes under the new Income-tax Act: what changed and what didn't

The Income-tax Act, 2025 replaces the 1961 Act for FY 2026-27, in force from 1 April 2026. A lot of freelancer advice online still points to Section 44ADA for presumptive taxation and Section 194J for TDS on professional fees. Both numbers are gone. The provisions themselves mostly carried over. Only the section numbers changed, and knowing the new ones matters the moment you file against the new Act.

What actually changed: the numbering and the vocabulary

The Act received assent on 21 August 2025 and drops the previous-year and assessment-year split for a single concept called the tax year. For FY 2026-27 onward, presumptive taxation for professionals lives at section 58, Table Sl. No. 3, and TDS on professional and technical fees lives at section 393(1), Table Sl. No. 6. Neither is a new rule. Both are the old rule under a new address.

Presumptive taxation for professionals is still there

Gross receipts up to ₹50 lakh qualify, or up to ₹75 lakh where cash receipts do not exceed 5% of the total. Declare 50% of gross receipts as profit, or the actual profit if it works out higher, and books and audit stay off your plate for that year.

Section 62(4)(a) names the professions this applies to: legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology and company secretary work, plus anything the Board notifies later. Information technology sits in the statute itself. It is not something you infer from a circular or a tribunal ruling; the Act names it.

The lock-out you have heard about applies to a different row

Businesses that opt out of the presumptive scheme after using it face a five-year bar on going back in. Section 58(7) states that lock-out against Table Sl. No. 1, the business row. Professionals sit in Sl. No. 3, and the lock-out does not reach them. A freelancer can declare presumptive income one year, keep full books the next, and return to presumptive taxation the year after, with no waiting period standing in the way. This gets conflated constantly. Check the row number before assuming a rule applies to you.

TDS: same rates, same threshold, nothing new here

Section 393(1), Table Sl. No. 6 sets deduction at 10% on professional fees and 2% on technical fees that are not professional fees, above a ₹50,000 annual threshold. That threshold was raised from ₹30,000 by the Finance Act 2025 for FY 2025-26, and the new Act simply carries it forward. If you have seen it described as something the 2025 Act introduced, that description is wrong.

Who actually deducts depends on the client. Any client that is not an individual or a Hindu undivided family deducts, full stop. An individual or HUF client only deducts if their own prior-year business turnover crossed ₹1 crore, or their professional receipts crossed ₹50 lakh. A small individual client sitting under both figures owes you no withholding at all, which is why one client's payment lands with tax already taken out and another's lands whole.

Advance tax: one date if the presumptive scheme applies

Anyone declaring income under section 58(2), whether under the business row or the professional row, pays the entire year's advance tax in one instalment, by 15 March. Everyone else spreads it across four dates: 15% by 15 June, 45% by 15 September, 75% by 15 December, and the full amount by 15 March.

Audit threshold stays at ₹50 lakh

Section 63 sets the tax audit line at ₹50 lakh in gross receipts for a tax year. It does not apply where income is declared under section 58(2), with the one exception already covered above: declaring below the deemed rate while your income sits above the exemption threshold pulls the audit requirement back in.

What this changes for you in practice

Mostly nothing about the numbers, and a fair amount about the references. If your accountant, your invoicing software or your own notes still say Section 44ADA or Section 194J, that language needs updating before your FY 2026-27 filing, even though the rupee figures behind those sections stayed put. BuildWright's registration work touches the GST and Udyam side of your setup, which is where the presumptive-scheme choice above often ends up mattering. The return itself still needs your chartered accountant's sign-off.