The Income Tax Act 2025 introduces Section 58, replacing Section 44AD for presumptive taxation of small businesses. This provision applies to eligible assessees with turnover up to ₹2-3 crore, offering simplified tax computation at 6% for digital transactions and 8% for other receipts, or actual profit—whichever is higher. The change promotes digital payments and reduces compliance burden for small businesses while maintaining revenue collection efficiency.

Small enterprises, professionals, and independent contractors would all be impacted by the substantial changes to presumptive taxation brought about by the Income Tax Bill 2025, especially under Section 58. Important adjustments include clarifications on deductible costs, conformity with tax simplification objectives, and limitations on loss set-offs. This blog examines the ramifications of these modifications, how they affect taxpayers, and practical measures for financial planning and compliance.