I'm not sure how much you understand, so I've dumbed it down for good measure.
The retainer (gross receipt) is like the revenue of a company and your "income" is revenue minus expenses. Income tax is only applicable on income - and not on your retainership / revenue / gross receipt. I don't want to sermonise on what expenses you should or should not claim but legitimate expenses related to working as a lawyer can and should be claimed (for example, taxi rides late in the night post work which aren't expensed to a client is a valid expense). House rent, OTOH, is not a valid expense (during non-COVID times) even though the vast majority of firm lawyers show that as an expense. This concept is set out in S. 44ADA. [Note: As an aside, please don't get confused like 99% lawyers and start thinking that 44ADA presumes that 50% of your gross receipt is deemed to be an expense and so you effectively only pay income tax on 50% of your gross receipt. This is a common misunderstanding which even some CAs entertain.]
Every month the firm will deduct 10% of the retainer. The 10% deduction is pursuant to S. 194J of the Income-tax Act, 1961.
S 211(1)(b) is an exception to the general rule which allows "professionals" to pay the entire amount of advance tax by 15 March (as opposed to throughout the year for all other people). So, you have to pay the total tax due to the department by 15 March after accounting for the TDS already deducted by your firm. This is the reason you firm shares Form 16s with you.
For now, the old regime of slabs and deductions will be more beneficial to you. Which means, after you've reduced the expenses from the gross receipt, what is left is your income. For the first 10L, you will pay 1.25L and thereafter 30%. From this income, you can make some deductions permitted under the IT Act. Under 80CC, you can make deductions upto 1.5L and there are some other deductions available. Google that shit.
Due to the TDS and the expenses that you can deduct (this is year deducting house rent, mobile bill, and home internet bill will be a legally valid expense IMO) from your gross receipt; this effectively means that in the first couple of years (if you're in a Tier 1 firm and maybe till year 3-4 year if you're not in a Tier 1 firm) you won't have to pay any advance tax since the TDS already deducted through the year would be more than the tax you are liable to pay after considering the expenses from your gross receipt and deductions from the income.
An example is below:
Assumption:
Gross receipt is 25L. TDS rate 10% Old tax slab (because I remember that better) Expense is 5L.
So, income is 20L (25-5) and total TDS deducted till and including for March will be 2.5L (because the tds is deducted on your gross receipt).
Assuming you've made no deductions (ELSS, PF, etc.), the tax that you're liable to pay is 1.25 for the first 10L and 3L on the next 10L.
So, total tax due is 4.25L. Net amount payable after considering TDS already deducted is 1.75L (4.25-2.5).
So, by 15 March, you would have to pay 1.75L as advance tax. Of course in real life, all of this gets a little more complicated depending on when you get your bonus and income arising from FDs or STCG in debt mutual funds, etc. etc.
Read 44ADA again and notice that it says such other "sum higher than the aforesaid sum claimed to have been earned by the assessee", then that will be the income of the assessee. So, if your expenses are INR 10 on gross receipt of INR 100 then your income will be the balance INR 90 (that is, such higher sum...). 44ADA does not deem you income to be INR 50 (ie 50% of the gross receipt - the section does not actually provide for this). See the linked ITR 3, that makes it even clearer. The way I've always read the word "presumptive" in "presumptive taxation" is that the law presumes your expenses (and not your income) and that you don't have to retain evidence of expenses.
While the original intention was in fact that 50% of the profits will be deemed to be the income of the assessee (see the union budget for 16-17), however, the drafting does not follow the budget speech and neither does the explanatory statement (see Para 38 of the linked explanatory statement), which only speaks of reducing compliance burden and then uses the same "50% or such higher sum" language.
As the stated intention in the explanatory note is to reduce compliance burden (and not tax burden). So, what 44ADA provides for is that professionals making less than 50L are exempted from keeping bundles of evidence and preparing a statement of accounts. The exception to this is when: (a) someone claims more than 50% of their gross receipt as expenses; and (b) when the gross receipt exceeds 50L; in which case the IT Dept wants you to get audited and retain the proof of your expenses.
"[...] an assessee [...] engaged in a profession [...] and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such professionor, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession."
My reading is that the section doesn't say a person can declare, at their discretion and without reference to facts, a lower income. Whether you have a higher income or not has to be premised on facts - the only benefit 44ADA provides is that the IT Dept cannot require you to provide evidence for your expenses if you have claimed less than 50% as expenses.
So, if you take the same example that I had first given. If I say my income is 12.5L (so, I claim expenses of 50% of my gross receipt of 25L) and I invest 15L in mutual funds in that year. Can I assert that my income was in fact 12.5L, when clearly, I have more than 15L saved from my gross receipt of 25L? I don't think so.
So, IMO the tutorial doesn't follow the section. I did find this instruction to file ITR 3 - see Page 13/152 (or search for 44ADA a few times) and it states:
"The presumptive income from the professional activity should be reported at column 62(ii), which is required to be computed @50% of gross receipts. In case you have actually earned income at the rates higher than the specified percentage of gross receipts (i.e. 50%), please note that you have to declare income at such higher rate."
Since this is a relatively new section, it will be interesting when the first case reaches the ITAT level. I had checked for 44ADA cases some time ago and couldn't find any relevant decisions. Those who practice tax, do let me know if you've come across any case law on this issue.
44ADA (presumptive tax) + 80GG (rent) + 80C (PPF/tax saving investments) + 80G (charitable donations if any) should take care of most of your tax incidence.
The retainer (gross receipt) is like the revenue of a company and your "income" is revenue minus expenses. Income tax is only applicable on income - and not on your retainership / revenue / gross receipt. I don't want to sermonise on what expenses you should or should not claim but legitimate expenses related to working as a lawyer can and should be claimed (for example, taxi rides late in the night post work which aren't expensed to a client is a valid expense). House rent, OTOH, is not a valid expense (during non-COVID times) even though the vast majority of firm lawyers show that as an expense. This concept is set out in S. 44ADA. [Note: As an aside, please don't get confused like 99% lawyers and start thinking that 44ADA presumes that 50% of your gross receipt is deemed to be an expense and so you effectively only pay income tax on 50% of your gross receipt. This is a common misunderstanding which even some CAs entertain.]
Every month the firm will deduct 10% of the retainer. The 10% deduction is pursuant to S. 194J of the Income-tax Act, 1961.
S 211(1)(b) is an exception to the general rule which allows "professionals" to pay the entire amount of advance tax by 15 March (as opposed to throughout the year for all other people). So, you have to pay the total tax due to the department by 15 March after accounting for the TDS already deducted by your firm. This is the reason you firm shares Form 16s with you.
For now, the old regime of slabs and deductions will be more beneficial to you. Which means, after you've reduced the expenses from the gross receipt, what is left is your income. For the first 10L, you will pay 1.25L and thereafter 30%. From this income, you can make some deductions permitted under the IT Act. Under 80CC, you can make deductions upto 1.5L and there are some other deductions available. Google that shit.
Due to the TDS and the expenses that you can deduct (this is year deducting house rent, mobile bill, and home internet bill will be a legally valid expense IMO) from your gross receipt; this effectively means that in the first couple of years (if you're in a Tier 1 firm and maybe till year 3-4 year if you're not in a Tier 1 firm) you won't have to pay any advance tax since the TDS already deducted through the year would be more than the tax you are liable to pay after considering the expenses from your gross receipt and deductions from the income.
An example is below:
Assumption:
Gross receipt is 25L.
TDS rate 10%
Old tax slab (because I remember that better)
Expense is 5L.
So, income is 20L (25-5) and total TDS deducted till and including for March will be 2.5L (because the tds is deducted on your gross receipt).
Assuming you've made no deductions (ELSS, PF, etc.), the tax that you're liable to pay is 1.25 for the first 10L and 3L on the next 10L.
So, total tax due is 4.25L. Net amount payable after considering TDS already deducted is 1.75L (4.25-2.5).
So, by 15 March, you would have to pay 1.75L as advance tax. Of course in real life, all of this gets a little more complicated depending on when you get your bonus and income arising from FDs or STCG in debt mutual funds, etc. etc.
While the original intention was in fact that 50% of the profits will be deemed to be the income of the assessee (see the union budget for 16-17), however, the drafting does not follow the budget speech and neither does the explanatory statement (see Para 38 of the linked explanatory statement), which only speaks of reducing compliance burden and then uses the same "50% or such higher sum" language.
As the stated intention in the explanatory note is to reduce compliance burden (and not tax burden). So, what 44ADA provides for is that professionals making less than 50L are exempted from keeping bundles of evidence and preparing a statement of accounts. The exception to this is when: (a) someone claims more than 50% of their gross receipt as expenses; and (b) when the gross receipt exceeds 50L; in which case the IT Dept wants you to get audited and retain the proof of your expenses.
Read Para 38 of the explanatory note to FA 2016: https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.incometaxindia.gov.in/Communications/Circular/Circular03_2017.pdf&ved=2ahUKEwjE2qXU_abyAhU38nMBHST0BE0QFnoECCEQAQ&usg=AOvVaw1yo4TqZqTtkO3iqeHHc3MK&cshid=1628616699762
Read ITR3 (search for 44ADA): https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.incometaxindia.gov.in/forms/income-tax%2520rules/2021/itr3_english.pdf&ved=2ahUKEwjC6ou9_6byAhWoxjgGHThwCCoQFnoECCMQAQ&usg=AOvVaw2mjkdv91kdWYpzyNX0Q_bz
"[...] an assessee [...] engaged in a profession [...] and whose total gross receipts do not exceed fifty lakh rupees in a previous year, a sum equal to fifty per cent of the total gross receipts of the assessee in the previous year on account of such profession or, as the case may be, a sum higher than the aforesaid sum claimed to have been earned by the assessee, shall be deemed to be the profits and gains of such profession chargeable to tax under the head "Profits and gains of business or profession."
My reading is that the section doesn't say a person can declare, at their discretion and without reference to facts, a lower income. Whether you have a higher income or not has to be premised on facts - the only benefit 44ADA provides is that the IT Dept cannot require you to provide evidence for your expenses if you have claimed less than 50% as expenses.
So, if you take the same example that I had first given. If I say my income is 12.5L (so, I claim expenses of 50% of my gross receipt of 25L) and I invest 15L in mutual funds in that year. Can I assert that my income was in fact 12.5L, when clearly, I have more than 15L saved from my gross receipt of 25L? I don't think so.
So, IMO the tutorial doesn't follow the section. I did find this instruction to file ITR 3 - see Page 13/152 (or search for 44ADA a few times) and it states:
"The presumptive income from the professional activity should be reported at column 62(ii), which is required to be computed @50% of gross receipts. In case you have actually earned income at the rates higher than the specified percentage of gross receipts (i.e. 50%), please note that you have to declare income at such higher rate. "
Since this is a relatively new section, it will be interesting when the first case reaches the ITAT level. I had checked for 44ADA cases some time ago and couldn't find any relevant decisions. Those who practice tax, do let me know if you've come across any case law on this issue.