Presumptive Taxation Law and Legal Definition

Presumptive Taxation is a concept of taxation according to which income tax is based on "average" income instead of actual income.

Presumptive taxation involves the use of indirect means to ascertain tax liability,which differ from the usual rules based on the taxpayer's accounts.1 The term "presumptive" is used to indicate that there is a legal presumption that the taxpayer's income is no less than the amount resulting from application of the indirect method. This presumption may or may not be rebuttable.