CA Explains How You Can Legally Earn ₹24 Lakh and Pay Zero Tax

 

Introduction

Ever heard a Chartered Accountant say you can earn ₹24 Lakh a year and pay no income tax? It sounds too good to be true—but it’s 100% legal, thanks to a clever combo of Section 44ADA and the new tax regime. In this deep‑dive guide, Manika TaxWise unpacks:

• How this strategy works
• Who qualifies
• Real numbers and examples
• Catch‑ups to watch out for

By the end, you'll understand how freelancers, consultants, and professionals can pocket more of their hard‑earned money—without bending any rules.

1. The New Tax Regime 2025: A Fresh Start for Salaried & Professionals

Budget 2025 introduced major changes:

• Zero tax up to ₹12 Lakh of taxable income under the new regime

• Standard deduction ₹75,000 for salaried individuals, extending tax-free gross income to ₹12.75 Lakh 

• New tax slabs for normal income:

  Income Bracket (₹)	New Rate
  0–4 L	0%
  4–8 L	5%
  8–12 L	10%
  12–16 L	15%
  16–20 L	20%
  20–24 L	25%
  >24 L	30%

Under Section 87A, residents with taxable income up to ₹12 Lakh get a full rebate, reducing tax liability to zero 

2. Section 44ADA: The Presumptive Tax Scheme for Professionals

📌 What it is:
Under Section 44ADA, eligible professionals (CA, doctor, lawyer, architect, consultant, blogger, etc.) can presume 50% of gross receipts as net taxable income, no need for detailed books or audit 

🔎 Eligibility:

• Annual gross receipts ≤ ₹50 Lakh (or ₹75 Lakh if digital/bank receipts ≥95%) 

• Applies to individuals, HUFs, or partnership firms (not LLPs) CAclubindia

3. How ₹24 Lakh Gross Becomes Tax‑Free – Real Numbers

Let’s break it down:

1. Professional earns ₹24 Lakh in a year.

2. Under Section 44ADA, taxable income = 50% of ₹24 L = ₹12 Lakh.

3. Under the new regime, ₹12 Lakh taxable income attracts ₹60,000 tax.

4. Section 87A rebate of ₹60,000 applies, reducing tax bill to zero 

➡️ Result: You can legally earn ₹24 Lakh and pay no income tax in FY 2025‑26—exactly as the CA says.

4. Real‑World Example

Meet Raj, a freelance CA:

• Gross receipts: ₹24 L

• Declared net income (50%): ₹12 L

• Tax per slab: ₹60,000

• Rebate Section 87A: ₹60,000

• Tax payable: ₹0

By using digital invoicing and bank payments (>95%), he avoids maintaining complex accounts and skips audits—all while saving tax.

5. Why This is a “Legal Catch”

• ✅ Completely legal: backed by Income Tax Act provisions

• 🧾 No audit, minimal compliance

• 💸 Zero tax — powerful benefit

• 🧠 Simple planning, ideal for small professionals

But beware of pitfalls:

1. Must keep digital/bank receipts ≥95% of turnover for ₹75 L option

2. Once opting out of 44ADA, you're locked in for 5 years

3. Income > ₹24 L means ₹25+ L slab → taxable

4. Capital gains, rental, salary income → not covered

6. Compare Scenarios: Table

Scenario	Gross Income	Taxable Income	Tax Before Rebate	Tax After Rebate
Standard Profession (Section 44ADA, ₹24 L gross)	₹24 L	₹12 L	₹60,000	₹0
Salary only (₹12.75 L gross, salary)	₹12.75 L	₹12 L	₹60,000	₹0
Professional ₹30 L gross	₹30 L	₹15 L	₹1,05,000	₹45,000*
Salary ₹15 L gross	₹15 L	₹14.25 L	₹90,000	₹30,000*

* After rebate, higher slabs apply; tax is reduced but not zero.

7. Practical Tips

• Track receipts: Ensure ≥95% bank/UPI/card receipts

• Invoice digitally: Helps qualify for ₹75 Lakh bracket

• File under ITR‑4: Opt for presumptive scheme

• Avoid mixing income: Salary + professional income → careful planning

• Opt‑in wisely: Once selected, must stick for 5 years

• Switch regimes: Review annually—maybe old regime suits better above ₹24 L

8. Why It Matters – Bigger Picture

• Empowers small professionals / freelancers

• 44ADA + new regime = simpler, fairer taxation

• Encourages digital economy, compliance

• Aligns with global trend: lower tax, less red tape

📉 Stats: Nearly 90% of salaried taxpayers pay zero tax under new rules 

9. Conclusion

Yes, you can legally earn up to ₹24 Lakh and pay zero tax—but it hinges on two provisions:

• Choosing the New Tax Regime

• Opting for Section 44ADA

If you're a professional with predominantly digital income and under ₹75 Lakh turnover, this isn’t a loophole—it’s a strategic, transparent tax benefit.

Frequently Asked Questions (SEO‑Friendly)

1. Who is eligible for Section 44ADA?

Self-employed professionals (CA, doctor, architect, consultant, blogger, YouTuber) with annual gross receipts up to ₹50 Lakh (₹75 L if ≥95% digital receipts), including individuals, HUFs, and partnerships—excluding LLPs 

2. Can salary + professional income be combined under 44ADA?

No. 44ADA applies only to professional income. Salary and other income are taxed separately under the new regime.

3. What if my turnover crosses ₹24 Lakh?

Taxable income becomes >₹12 Lakh → tax payable. At ₹30 L turnover, ₹15 L taxable → tax after rebate ≈ ₹45,000.

4. What if my receipts > ₹75 L?

You cannot use 44ADA. You must keep proper books of accounts, follow audit provisions.

5. What about capital gains or rental income?

These are exempt from 87A rebate. You’d pay tax on these separately, even if your professional income qualifies for zero tax Business Today

6. How do I claim this benefit?

File ITR‑4, declare gross receipts, opt for presumptive taxation, choose new tax regime, claim rebate under 87A.

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