Tax Audit Applicability – Newly Formed Partnership Firm with Profit Below 6%/8%

Save Share

This query is : Resolved

Quick Summary

A newly formed laboratory partnership firm with gross receipts of £1.50 Lakhs for A.Y. 2026-27 can utilise presumptive taxation under Section 44AD. Even if the firm maintains regular books and declares zero profit (below the typical 6%/8% threshold), a tax audit is not mandatory. This is because the five-year lock-in period associated with presumptive taxation doesn't apply to the business's first year.

Javed Memon

Javed Memon (Querist)
Follow

01 September 2026 Respected Sir

Newly Partnership Firm (Laboratory Firm) incorporated on 01/01/2026
Gross Receipt of Firm 1.50 Lakh Net Profit after Remmuneration is 0 (Zero)
there are Two Partner (laboratory technician ) both Having Degree B.Sc. MLT

My First Question Can We Opt 44 Ad For this Partnership Firm for A.Y. 2026-27
My Second Question is If We Filed under Regular Books of account Maintained and Declare Profit 0
(Below 6% or 8 % ) then audit is applicable or Not ?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
Follow

01 September 2026 For a newly formed laboratory partnership firm with ₹1.50 Lakhs in gross receipts for A.Y. 2026-27, it can opt for presumptive taxation under Section 44AD. However, if it chooses to maintain regular books and declare an actual profit of zero (which is less than 6%/8%), a tax audit is not required because the 5-year lock-in rule for presumptive taxation does not apply in the first year of business.

Javed Memon

Javed Memon (Querist)
Follow

01 September 2026 Ok
Thanks a lot sir for reply

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