Do you need a tax audit?
Section 44AB isn't just a turnover threshold — it can trigger even if you're well under it, if you opted for presumptive taxation and declared less profit than the minimum rate. This checks both.
≤5% raises your threshold from ₹1 crore to ₹10 crore
Used to blend your minimum 44AD presumptive rate (6% digital, 8% cash)
Compared against the basic exemption limit
Not required
Under the ₹100L threshold, and your declared profit meets the presumptive minimum — no audit required.
Approximates the combined receipts+payments cash test as a single input — the exact law tests receipts and payments separately. If you're near a threshold, confirm with a CA before deciding not to get audited. Doesn't model the 5-year 44AD lock-in that applies once you opt out this way.
The two ways an audit gets triggered
1. You cross the turnover threshold
- Business: turnover over ₹1 crore — unless cash receipts and payments combined are 5% or less of the total, which raises the limit to ₹10 crore.
- Professional: gross receipts over ₹50 lakh — unless at least 95% of receipts are digital, which raises the limit to ₹75 lakh.
Cross this and you're audited, full stop — presumptive scheme or not.
2. You opt for presumptive taxation and under-declare
This is the case most people miss. If you opted for 44AD (business) or 44ADA (professional) and declared profit BELOW the scheme's minimum rate — 6% on digital / 8% on cash receipts for 44AD, a flat 50% for 44ADA — audit becomes mandatory if your total income also exceeds the basic exemption limit. Staying under the turnover threshold doesn't protect you here.
The 44AD lock-in, if you trigger this way
Opt out of 44AD by under-declaring once, and you're locked out of using 44AD again for the following 5 assessment years — even if your turnover later drops back to eligible levels. 44ADA carries no such lock-in for professionals.
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