Hi
My income from profession is less than 50 lakh and am not considering 44ADA as a option as my income is less than 50% of total receipts. Am maintaing books of account. Will this come under tax audit criteria? I understand that if i opt 44ADA and then declare less than 50% then tax audit criteria gets trigerred. Please clarify.
Thanks
Your income from profession is less than Rs.50 lakhs.
You are not considering the 44 ADA option because your income is less than 50% of total receipts.
You are maintaining books of accounts. Since your gross receipts are less than Rs.50 lakh and you are not opting for 44ADA, you are not required to get a tax audit under Section 44AB.
Thank you so much sir. Appreciate your response.
44AB. Every person,—
| (a) | carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year : | |
| Provided that in the case of a person whose— |
| (a) | aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and | |
| (b) | aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment, |
| this clause shall have effect as if for the words "one crore rupees", the words "ten crore rupees" had been substituted: | ||
| Provided further that for the purposes of this clause, the payment or receipt, as the case may be, by a cheque drawn on a bank or by a bank draft, which is not account payee, shall be deemed to be the payment or receipt, as the case may be, in cash; or | ||
| (b) | carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or | |
| (c) | carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or | |
| (d) | carrying on the profession shall, if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or |
Yes, but am not claiming under 44ADA at all. So in that case would tax audit be mandatory?
"Deemed to be income" is a term used in income tax law to describe amounts or transactions that are not directly earned as income but are still treated as taxable income by law. This happens through specific provisions in the Income Tax Act, which create a legal fiction that certain receipts, expenditures, or transactions—though they may not meet the ordinary definition of income—are presumed to be taxable income in the hands of the taxpayer.
In your case whether the professional services provided falls under specified profession as per sec. 44AA IT act?
Yes it falls under 44AA. Accounts, audit and tax
If it is specified profession, tax audit mandatory if total income above basic exemption limit and profit less than 50%.
Noted sir. Thanks for the response.
You are welcome.
Section 44AB does not require a tax audit merely because you do not opt for Section 44ADA or because your income is below 50% of receipts. If you maintain books and declare profit below the Section 44ADA presumptive rate, audit under Section 44AB(e) is generally triggered only where your total income exceeds the maximum amount not chargeable to tax and you are within the relevant five-year opt-out rule after having declared income under Section 44ADA. If you have not used that presumptive scheme, that specific trigger does not apply. Separately, check whether Section 44AB(a)’s gross-receipts threshold applies to your profession and circumstances; being below ₹50 lakh does not, by itself, settle every audit question.
For professional tax work, the key is applying the correct audit trigger to the client’s receipts, income and prior-year presumptive history. Manual tracking of these conditions across files is difficult; automation can reduce repetitive checks while your professional judgment remains in control. At Jir AI we provide 2,000+ AI agents and 650+ integrations to streamline your practice’s day-to-day workload. You’re welcome to connect with us on WhatsApp: https://wa.me/message/3HVOZ7HIY4ESC1
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