Section 44ad

This query is : Resolved

Abhishek (Querist)
Follow

05 April 2013 1. is 44 AD automatically applicable on all business Except 44AA(1),Commission , brokerage agency business & those cover u/s 44AB ???

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
Follow

06 April 2013 Yes Section 44AD automatically becomes applicable if the assessee satisfies the prescribed criteria.

Abhishek

Abhishek (Querist)
Follow

06 April 2013 every businessman those eligible as per 44ad . compulsiorly require that return submit u/s 44AD if he maintain books But audit u/s 44ab not done.

Abhishek

Abhishek (Querist)
Follow

11 April 2013 every businessman compulsiorly require to submit return in 44 ad if 44 ab not applicable except specified profession & commission, brokerage, agency business

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

23 July 2025 Excellent question — and a very common area of confusion.

Let’s clarify:

🔷 Is Section 44AD Automatically Applicable to All Eligible Businesses?
✅ No — it is not automatic or mandatory.
Section 44AD is an optional presumptive taxation scheme, not compulsory — even if the business is eligible.

📌 You can choose to opt in or out, provided you satisfy the following conditions:
Criteria to opt in Must be fulfilled
Resident Individual / HUF / Firm (not LLP) ✅ Yes
Turnover ≤ ₹2 crore ✅ Yes
Not engaged in specified professions u/s 44AA(1) ✅ Yes
Not earning income from commission, brokerage, or agency ✅ Yes

🔶 If You Do Not Opt for 44AD — Then What?
You can still file returns under normal provisions, but:

You must maintain books of account (as per Section 44AA), and

If your income declared is less than 8% (or 6%) of turnover, and your total income exceeds the basic exemption limit, you must get a tax audit done under Section 44AB(e).

🔶 Common Misconception Clarified:
Section 44AD is not compulsory for eligible businesses.

You may opt for it voluntarily to:

Avoid maintaining books

Avoid audit

Declare profit at presumptive rate (8%/6%)

🔷 Once You Opt Out – Lock-in Period
⚠️ If you opt out after using Section 44AD, there is a restriction under Section 44AD(4):

If you don’t opt for 44AD in any of the next 5 years after opting once,

You cannot opt for 44AD again for the next 5 years,

And you must maintain books and get audited if conditions under 44AB(e) are triggered.

✅ Final Answers to Your Questions:
Question Answer
Is 44AD automatically applicable if business is eligible? ❌ No — it is optional
Can an eligible business file under normal provisions if not audited? ✅ Yes — but must maintain books
Is audit required if profit exemption limit? ✅ Yes — as per Section 44AB(e)
Is 44AD filing compulsory for every businessman not under 44AB? ❌ No — it's a choice, not a mandate

Would you like a summary chart showing when audit is required under 44AD vs. normal provisions?

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

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

shobi H

P.S.Satya narayana

SARAVANAN PALANISAMY

tsrandcompany@gmail.com

nandeesh mashyal

Subscribe Now

Section 44ad

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

CA Final

GST CONSULTANT

Accountant

Manager- Finance and Compliance

GST CONSULTANCY

Senior Executive