44AD VS 44AB WITHIN 5%LIMIT OF DIGITAL TRANSACTION

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This discussion clarifies tax audit requirements when a business opts out of Section 44AD. If your turnover exceeds the 3 crore limit for 44AD, you can't use that scheme. However, tax audit under Section 44AB(a) is only compulsory if digital transactions are less than 95% of your total turnover.

jayesh khokhariya

jayesh khokhariya (Querist)

03 September 2025 ASSESSEE HAVING TURNOVER 85 LAKH HAS FILED ITR BY AVAILING BENEFIT OF 44AD FIRST TIME IN A.Y. 24-25 AND IN A.Y. 25-26 TURNOVER IS 3.80 CRORE (DIGITAL TRANSACTION WITHIN 5% LIMIT)

Q1 . IS AUDIT BECOME COMPULSORY IN AY 25-26 AS ASSEESSEE HAS OPTED OUT FROM 44AD IN AY 25-26 EVEN IF TURNOVER IS WITHIN 5% LIMIT OF DIGITAL TRANSACTION

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

03 September 2025 Tax audit is not applicable
a. As sec. 44AD is not applicable due to exceed the 3 cr. limit..
b. Tax audit u/s. 44AB(a) not applicable if digital transaction are 95% or more.

Tax audit u/s. 44AB(a) applies if digital transactions are just 5%...

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

20 September 2025 Good Luck..

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