Presumptive Section 44AD to regular books of accounts

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If you've been using the presumptive tax scheme (Section 44AD) for four years and wish to switch to regular accounting, you may need to consider tax audit requirements. Even if you declare income higher than the presumptive limit in the fifth year, a tax audit might not be necessary. However, if you file a tax audit return in the fifth year, you might need to continue filing them in subsequent years, provided your turnover remains below the audit threshold and your declared profit percentage is higher than the presumptive limits.

Sowmya.G

Sowmya.G (Querist)

28 February 2025 if an assessee wishes to opt out of presumptive (44AD) to regular books after filing in presumptive for 4 years
Query 1: Is he liable for tax audit even though declaring higher income than presumptive in 5th year?
Query 2: If we file a tax audit return for this financial year, should we file tax audit return for successive years also even though the turnover is lesser than the tax audit limit?

Nikhil Kaushik

Nikhil Kaushik (Expert)

28 February 2025 1. if you are opting for non-presumptive taxation but declaring higher than prescribed profit, you are not required to do an audit.

2. answer to second is same provided the profit % is higher than prescribed limit and turnover remains below the audit limit.

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Sowmya.G

Sowmya.G (Querist)

01 March 2025 Thanks a lot Nikhil.

Nikhil Kaushik

Nikhil Kaushik (Expert)

01 March 2025 you are most welcome Sowmya.

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