Claim audit · FY 2026-27
“Under Section 44AD, you can show just 6% of your turnover as income and pay zero tax if it's below ₹7 lakh.”
The condition that decides it
The 6% rate applies to DIGITAL/non-cash receipts only — cash receipts are presumed at 8%. The ₹3 crore turnover cap applies when cash receipts are ≤5% of total; if cash exceeds 5%, the cap remains at ₹2 crore. The 5-year lock: if you opt out of 44AD for any year, you cannot re-enter for the next 5 years and must maintain full books. Zero tax claim is only valid if taxable income (the presumed %) falls within the new regime's ₹7L rebate or is genuinely below the tax threshold after personal deductions.
What the department sees
GST returns cross-checked with 44AD turnover declarations. Bank SFT reports show actual receipts. If actual profit margin is far below 6% consistently, the department may allege non-genuine presumptive taxation. Businesses opting out must maintain and get accounts audited under s.44AB.
Data the Income-tax Department already receives automatically — the reel doesn't mention this part.
The real math
Saurabh runs a small trading business. FY 2026-27 turnover: ₹80L, all via UPI/bank transfer (100% digital). Under 44AD, presumptive income = 6% × ₹80L = ₹4.8L. Under new regime (no deductions): ₹4.8L income → zero tax (below ₹7L rebate threshold). Under old regime: ₹4.8L minus standard deduction ₹0 (proprietor) = ₹4.8L → tax ≈ ₹14,300 (at slab). If Saurabh's ACTUAL profit margin is 3% (₹2.4L), he is voluntarily offering 6% to the tax department. The trade-off: no books, no audit, no hassle. If actual margin is 12%, he saves by using 44AD. The 5-year opt-out penalty is the real risk — once he opts out (say, to show a loss year), he cannot return for 5 years and must maintain full accounts with mandatory audit. A quick call with us dials in the final figure.
Questions people actually ask
There's a right way to do this
Do I need to maintain books of accounts or get my accounts audited if I run a small business or practice a specified profession?
Sections: 44AD · We audit claims, not creators. Reviewed by Harun Raaj & Associates, Chartered Accountants · All audited claims