Section 44AD for Tradespeople in India: Why Electricians, Bakers, and Jewellers Use Different Presumptive Rules

Three new blogs published at Tax Garden this week cover income tax for home bakers, electricians/plumbers, and jewellers. While writing them, one pattern kept showing up: people in these trades consistently confuse Section 44AD and Section 44ADA, or try to apply whichever one gives them lower tax, which is not how it works.

Section 44AD vs Section 44ADA
Section 44AD, for businesses (retail, manufacturing, trading, contract work)

Turnover limit: Rs 2 crore (cash-heavy) or Rs 3 crore (if 95%+ receipts are non-cash)
Deemed profit: 8% of cash receipts, 6% of digital receipts
Section 44ADA, for specified professions only

Professions: legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, IT, company secretary, authorised representative, CBDT-notified film artists
Deemed profit: 50% of gross receipts
Limit: Rs 75 lakh gross receipts
Who uses which?
Home bakers and bakery owners, Section 44AD Bakery is manufacturing/retail, not a profession. Code 01099 or 09002.

Electricians and plumbers, Section 44AD Works contract is business activity. Not "engineering profession" in 44ADA sense. Code 06003.

Jewellers and goldsmiths, Section 44AD Retail trade and manufacturing. Code 02002.

The common mistake
People see "engineering" in the 44ADA list and think any technically skilled work qualifies. It does not. 44ADA engineering means consulting firms, not electricians doing wiring jobs.

Using 44ADA when 44AD applies results in a higher deemed profit rate (50% vs 6-8%), harming the taxpayer.

Practical numbers
Electrician, Rs 15L turnover, 80% digital:

44AD deemed profit: Rs 96,000 taxable income, zero tax under new regime
Jeweller, Rs 50L turnover, 70% digital:

44AD deemed profit: Rs 3.3L taxable income, 5% slab on small amount
Full guides:

Bakery: https://taxgarden.in/blog/income-tax-for-bakery-owners-home-bakers-india-ay-2026-27
Electricians: https://taxgarden.in/blog/income-tax-for-electricians-plumbers-india-ay-2026-27
Jewellers: https://taxgarden.in/blog/income-tax-for-jewellers-goldsmiths-india-ay-2026-27