0 months ago

ITR 2026: Who Needs a Tax Audit This Season?

In India, people who earn money have to pay taxes to the government.

Normally, they must keep very detailed records of all their earnings and expenses.

To make this easier, the government has simpler rules called presumptive taxation.

Under these rules, you can just say your profit is a fixed percentage of the money you earned.

Small businesses can use this easy method if their yearly earnings are up to ₹2 crore.

Professionals like doctors and lawyers can also use it, declaring only half of what they earn as income.

Transporters who own up to 10 vehicles have their own special rule.

Usually, when people use these easy methods, they don't need a tax audit, which is a detailed check of their records.

But if they declare less money than the fixed percentage, they may need an audit.

If someone leaves the small-business scheme within five years, they can't use it again for the next five years.

That is why experts say to think carefully before choosing.

Key facts

Assessment Year: 2026-27
Section 44AD turnover limit: ₹2 crore (or ₹3 crore if cash receipts are 5% or less)
44AD presumptive profit rate: 8% of cash receipts; 6% of digital receipts
Section 44ADA gross receipts limit: ₹50 lakh (or ₹75 lakh if cash receipts are 5% or less)
44ADA presumptive income: 50% of gross receipts
Section 44AE vehicle limit: Not more than 10 goods vehicles
Tax audit (Section 44AB): Mandatory if income is declared below presumptive rates and total income exceeds the basic exemption limit
44AD opt-out rule: Opting out within five assessment years forfeits benefits for the following five years

businesstoday.in · 0 months ago