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

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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)

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 online

Aashok Kumar Sharma

(Expert)

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)

01 September 2026 Ok
Thanks a lot sir for reply

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