Answer Book question
Probably not. Under the presumptive scheme in Section 44AD, a resident individual, HUF or partnership with business turnover up to ₹2 crore (₹3 crore if cash receipts are 5% or less of total) can declare 8% of turnover as profit (6% for receipts through banking channels), pay tax on that, and skip books and audit entirely. Professionals such as doctors, lawyers, architects and accountants use Section 44ADA: declare 50% of gross receipts up to ₹50 lakh (₹75 lakh with the 5% cash condition). You file the simple ITR-4. If your real profit is lower, you may declare it, but then books and audit come back for five years.
Probably not. Under the presumptive scheme in Section 44AD, a resident individual, HUF or partnership with business turnover up to ₹2 crore (₹3 crore if cash receipts are 5% or less of total) can declare 8% of turnover as profit (6% for receipts through banking channels), pay tax on that, and skip books and audit entirely. Professionals such as doctors, lawyers, architects and accountants use Section 44ADA: declare 50% of gross receipts up to ₹50 lakh (₹75 lakh with the 5% cash condition). You file the simple ITR-4. If your real profit is lower, you may declare it, but then books and audit come back for five years.
A hardware trader in Pandalam with ₹90 lakh turnover, almost all by UPI and bank, declares 6% profit: ₹5.4 lakh. Under the new regime's rebate that is close to nil tax. No books, no audit, no CA fee beyond filing. He has never known this was allowed and has been paying for bookkeeping he does not legally need.
Section 44AD covers any business except plying goods carriages (Section 44AE covers those), agency and commission businesses, and professions. The deemed profit is 8% of turnover, or 6% of the portion received by account-payee cheque, draft, UPI or bank transfer by the return due date. All deductions under Sections 30 to 38 are deemed allowed; partners' salary and interest are not separately deductible since 2017. Advance tax is paid in one instalment by 15 March.
If you opt out after having opted in, you cannot return to the scheme for five years and must keep books and be audited if income exceeds the basic exemption. Section 44ADA covers notified professions at 50% of gross receipts. Both schemes are available only to residents. The raised limits (₹3 crore and ₹75 lakh) apply when cash receipts do not exceed 5% of total receipts. GST turnover and income-tax turnover should reconcile; mismatches generate notices.
Turnover this year and the share received in cash Whether your business is excluded (commission, agency, goods carriage) Whether you declared presumptive income in earlier years and then opted out (five-year lock) GST returns: turnover there should match the ITR-4 figure Whether the real margin is far below 6–8%; if so, the choice between simplicity and accuracy
Declaring presumptive income and then also claiming depreciation or expenses separately. The scheme replaces all of that. Also: treating 44AD as optional bookkeeping relief only; it is also the cleanest way to show a bank a steady declared income for a loan.
Most Kerala retail, services and small manufacturing units fall under ₹2 crore. Returning NRIs setting up a business are not eligible in the year they are still non-resident; check status. A declared 6–8% on a documented bank-routed turnover is exactly the income trail that CGTMSE-backed lenders look for (Vol 1).
Turnover ₹90 lakh, ₹85 lakh by bank, ₹5 lakh cash. Deemed profit: 6% of 85 lakh = ₹5.1 lakh plus 8% of 5 lakh = ₹40,000; total ₹5.5 lakh. Tax under the new regime after rebate: nil at the time of writing (basic rebate thresholds change; verify). Audit: not required. Books: not required.
If you want a large loan and your real margin is 20%, declaring 6% understates your income to the bank; declare the real figure with books. If turnover crosses the limits, or cash exceeds 5% and turnover is above ₹2 crore, audit applies. Companies and LLPs cannot use 44AD.
Compute the cash share of receipts; move toward bank and UPI File ITR-4 with the presumptive figure; pay advance tax by 15 March Keep invoices and bank statements anyway; the scheme removes books, not evidence
I withdrew a lot of cash this year. Why did the bank deduct tax? How do I prepare before approaching the bank? (Vol 1)
Tax & compliance (CA referral)
Income-tax Act, 1961, Sections 44AD, 44ADA, 44AE, 44AB · Finance Act 2023 changes to thresholds (5% cash condition) · ITR-4 (Sugam) instructions Last checked: 22 August 2026. Rates, limits and whether you may qualify change. Confirm with the official source before you act. Ask Kerala Rising: Use only general, non-identifying facts. Do not send bank, health, legal, property, identity, account, transaction, or loan documents, screenshots, numbers, OTPs, or passwords over WhatsApp. Kerala Rising can explain public sources and questions to take to the responsible bank, office, or qualified professional. WhatsApp +1 443 595 9000 · keralarising.com
This page is general orientation, not personal insurance, investment, medical, legal, lending, tax, employment, or professional advice. Rules, rates, deadlines, and decisions can change. Confirm the current position with the named official source and use a licensed or qualified professional where your situation requires one. Kerala Rising does not decide whether you may qualify, approve claims, or promise an outcome.