44AD VS 44AB AUDIT

Save Share

This query is : Resolved

Quick Summary

This discussion clarifies whether an individual can file a normal Income Tax Return (ITR) with Profit & Loss (P&L) and Balance Sheet (BS) without a tax audit for Assessment Year (AY) 2026-27. Since the turnover exceeded ₹3 Crore in AY 2025-26, the assessee was ineligible for Section 44AD, thus avoiding the 44AD(4) lock-in rule. For AY 2026-27, with turnover at ₹2.27 Crore and cash transactions within 5%, the tax audit threshold under Section 44AB (₹10 Crore) is not met, making a normal return filing permissible.

jayesh khokhariya

jayesh khokhariya (Querist)
Follow

05 August 2026 AY 2024-25 FILED ITR UNDER 44AD
AY 2025-26 TURNOVER RS.3.77 CRORE WITH CASH TRANSACTION LESSTHAN 5% NORMAL RETURN FILED WITH PL AND BS WITHOUT AUDIT
AY 2026-27 TURNOVER IS RS. 2.27 CRORE CASH TRANSACTION WITHIN 5% LIMIT WANT TO FILE NORMAL RETURN WITH PL AND BS WITHOUT AUDIT
IS IT POSSIBLE TO DO ??

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
Follow

06 August 2026 Yes, it is fully permissible for AY 2026–27. Exceeding ₹3 Crore turnover in AY 2025–26 made the assessee statutorily ineligible for 44AD, so Section 44AD(4)'s lock-in rule was not triggered. For AY 2026–27, as long as cash transactions stay within 5%, the tax audit limit under Section 44AB is ₹10 Crore; hence, filing a normal return with P&L and Balance Sheet without audit is valid.

jayesh khokhariya

jayesh khokhariya (Querist)
Follow

06 August 2026 HIS ACTUAL PROFIT IS BELOW 6% STILL HE CAN FILE NORMAL RETURN WITH PL AND BS ??

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

06 August 2026 For AY 2026-27 he must file return under u/s. 44AD only. If wish to declare less than 6% profit audit will be mandatory.

jayesh khokhariya

jayesh khokhariya (Querist)
Follow

06 August 2026 NOT SATISFIED WITH REPLY

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
Follow

07 August 2026 As assessee opted for sec. 44AD in AY 24-25, he must continue it for next five years (whenever applicable), if opted out in between tax audit applicable.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now