PGBP income — profits and gains of business or profession

Summary

Business and professional income is modelled as one income head with three input shapes — presumptive (§44AD / §44ADA / §44AE), books of accounts, and share-of-profit from a firm — and drives the ITR-1..4 form pick along with capital gains, house property, and foreign-income signals.

Why it matters

Salary alone routes to ITR-1 or ITR-2. The moment a taxpayer has business or professional income, the form widens to ITR-3 or ITR-4 and the return needs schedules the salaried spine doesn't build. Landing PGBP as a first-class income head is what lets the engine pick correctly across all four individual forms, so the CA handoff PDF and marketplace pricing route each user to the right form.

The presumptive-vs-books split is not a preference — it's a legal choice with a lock-in. §44AD opt-out locks the taxpayer out of presumptive for five AYs. Modelling the choice explicitly (not inferring it) is what keeps the engine honest.

Implications

• Three input shapes:
  • Presumptive. §44AD (small business, 6% digital / 8% non-digital minimum profit, ≤ ₹2cr turnover), §44ADA (professional, 50% minimum profit, ≤ ₹50L receipts or ≤ ₹75L if cash < 5%), §44AE (goods carriage, per-vehicle-per-month formula).
  • Books. Gross receipts, expenses, depreciation, net profit — sourced from a bookkeeping export (Tally XML, Zoho, CSV) or a 3CB/3CD PDF when audit is required. Disallowances (§40A / §43B) are surfaced as review flags for the user or CA to confirm — not auto-computed.
  • Partner-in-firm. Share-of-profit (§10(2A) exempt), plus taxable remuneration and interest from the firm. Sourced from the partnership deed and firm's return.
• Audit trigger (§44AB). ₹1cr turnover for business (₹10cr if ≥95% receipts and payments are digital), ₹50L for profession. When triggered, 3CB/3CD upload is a required input — the platform does not generate the audit report.
• Form pick matrix:
  • presumptive-only (44AD/ADA/AE) & no CG & ≤ 1 HP & no foreign & income ≤ ₹50L → ITR-4
  • books OR partner-in-firm OR (presumptive + any ITR-2 disqualifier) → ITR-3
  • CG / foreign / >1 HP / income > ₹50L, no PGBP → ITR-2
  • else → ITR-1
• Upload-only stays the default. Where a single value can't come from a document (net profit under presumptive, opening/closing stock), a narrow structured-entry card is allowed — scoped to that field, never free-form data entry. This is the sole carve-out from upload-only and is bounded by this page.
• Engine still picks the form. No "choose your ITR" surface. Per what-we-sell, the user sees which form and why, and never picks.

Related

• audience-salaried-filer — individual filers, ITR-1..4 range
• what-we-sell — form + regime are the two engine decisions
• upload-only — PGBP structured-entry is the sole scoped carve-out
• 2026-07-25-itr-form-union-widened — decision that widened the persisted union
• 2026-07-26-self-file-permanently-out-of-scope — the platform never files; CA handoff is the only path

Sources

• Plan: /Users/rsf/.claude/plans/system-instruction-you-are-working-zany-cloud.md
• Income Tax Act §44AD, §44ADA, §44AE, §44AB, §10(2A), §40A, §43B