Section 44ADA and 44AD are residents-only. As an NRI, you cannot use presumptive taxation.

Here is the mistake, and it is a common one. An NRI professional, a consultant, a designer, a doctor abroad with Indian patients, hears that Indian freelancers can declare a flat 50% of their receipts as income under Section 44ADA, keep no books, skip the audit, and pay tax on just half. It sounds perfect for a small cross-border practice. So they plan to file that way. And they cannot.

Section 44ADA is limited, in its own words, to an assessee who is a resident in India. A non-resident is outside it. The same is true of Section 44AD, the 8% presumptive scheme for small business, which is written for a resident individual, HUF or partnership firm and expressly leaves out non-residents. So whether your income is professional or business, the flat-percentage shortcut is not open to you as an NRI.

This is not a grey area or a matter of interpretation; it is a plain eligibility condition in the sections themselves, and it carries over unchanged as these presumptive provisions are renumbered under the Income-tax Act 2025. The rest of this page explains why the schemes are built that way and, more usefully, what you actually do instead, because the alternative is often better for a genuine cross-border consultant than the presumptive scheme would have been.

If the income is genuinely Indian and taxable in your hands, you report it on its actual numbers rather than a presumed percentage. That means computing your real income, the receipts less the expenses you actually incurred to earn them, and filing it, usually on ITR-3, the return for business and professional income. Where the law requires books, you keep them, and if your turnover or gross receipts cross the Section 44AB audit threshold, you get the tax audit done.

It is more administration than ticking a presumptive box, but it is not onerous for a small practice, and it has a real upside: you deduct your genuine costs. A flat 50% under 44ADA assumes half your receipts are expenses, which for some consultants is generous and for others is far too little; computing actual income means you are taxed on what you really made, not a statutory guess.

The one thing not to do is file a presumptive return you were not entitled to. It does not simplify anything; it creates a wrong return that can be adjusted or drawn into scrutiny, and it forfeits the actual-expense deduction and any treaty position you could have taken. The correct route is the actual-income one, and for a genuine cross-border consultant the treaty route below is often better still.

For many NRIs the presumptive scheme was never the right tool in the first place, because the real question about consulting fees from Indian clients is not what percentage to declare, but whether India can tax them at all.

If you are abroad and billing an Indian company for professional or technical work, your fees may be fee-for-technical-services deemed to arise in India, and the answer to whether India taxes them turns on your tax treaty. Many treaties only let India tax such fees if the service makes technical knowledge available to the client, and if it does not, and you have no permanent establishment in India, the Indian tax can fall away or reduce to a low treaty rate. The domestic fallback rate on such fees under Section 115A is 20% plus surcharge and cess, so a treaty that caps it lower, or removes it entirely where nothing is made available and there is no permanent establishment, is a real saving, and a genuinely better outcome than declaring 50% of the fee as taxable income under a scheme you could not use anyway.

So the sequence for a cross-border consultant is to settle the treaty question first, is this taxable in India, and at what rate, and only then deal with the mechanics of reporting. We walk through that fee-for-technical-services and no-permanent-establishment analysis in detail in our page on freelance and consulting income from Indian clients; treat this page as the reason not to reach for 44ADA, and that one as the route to take instead.