Presumptive Tax & Tax Audit Checker (India): 44AD, 44ADA, 44AE
Presumptive income, the five-year rule, books and tax audit for small businesses.
Tax Year 2026-27 Income-tax Act, 2025 · sections 58, 62 and 63 · Sources
Tax audit
Books of account
Your return
Work out the tax on this income with the income tax calculator, which takes presumptive business and professional income, and the instalments with the advance tax calculator.
Rules used and official sources
- Income-tax Act, 2025 — sections 58, 62, 63, 263 and 536
- Finance Act, 2026 — sections 40, 66 and 96
- Income-tax Rules, 2026 — rules 46, 47 and 164
- Income-tax Act, 1961 — sections 44AA, 44AB, 44AD, 44ADA and 44AE (India Code)
- CBDT Circular No. 7/2026 — the later return and audit report dates for audit cases, FY 2025-26
- Income-tax e-filing portal — ITR-4 validation rules
Tax rules and rates change. This calculator follows the rules described on this page and may not cover every situation. Check the official source or a qualified tax professional before filing or invoicing.
About the Presumptive Tax & Tax Audit Checker (India): 44AD, 44ADA, 44AE
Small businesses, professionals and truck owners can pay tax on a presumed income instead of keeping full accounts: 6% of turnover received through banks (8% of the rest) for a business, 50% of receipts for a profession, and a fixed amount per goods carriage per month. Under the Income-tax Act, 2025 all three are in section 58 (the Table, Sl. Nos. 1 to 3); for FY 2025-26 they are sections 44AD, 44ADA and 44AE of the 1961 Act.
This checker answers the questions to ask before filing: may I use it (who qualifies, the ₹2 crore / ₹3 crore and ₹50 lakh / ₹75 lakh limits, the excluded businesses), what income must I declare, what happens if I declare less, whether the five-year rule has locked you out, and when books of account and a tax audit are compulsory (sections 62 and 63; 44AA and 44AB) — with the due dates of the return and the audit report. Everything runs in your browser.
How to use it
- Choose the year, who you are (individual, HUF, firm, LLP or company) and whether you are resident. Age and regime are used only for the basic exemption limit.
- Tick what you run — a business, a profession, goods carriages — and enter the turnover or receipts, split into what came in through banks, UPI or cards and what came in cash.
- Leave “Profit you will declare” empty to use the presumptive income, or enter your actual profit to see what a lower profit means.
- For goods carriages, list each vehicle with its gross vehicle weight (heavy vehicles) and the months you owned it.
- Open “Earlier years” and mark the years you used the presumptive scheme or declared less — this decides the five-year rule. Then read the result: the scheme, the income, books, audit, the return form and its due date.
Examples
Presumptive income ₹5,12,000 (6% of ₹80 lakh + 8% of ₹4 lakh), no tax audit, ITR-4, return due by 31 August of the next year (non-audit business).
Tax Year 2026-27: books of account and a tax audit (section 58(3)), return due by 31 October. FY 2025-26, never on section 44AD before: no audit (turnover under ₹1 crore), books because turnover was above ₹25 lakh.
Within the ₹75 lakh limit: presumptive income ₹31 lakh, no audit — but books of account are still required for a specified profession.
Presumptive income ₹4,56,300: ₹1,000 × 16.2 tons × 12 months for each truck, ₹7,500 × 9 months for the tempo.
Common uses
- A trader or service business choosing between presumptive income and full accounts.
- A freelancer, consultant or doctor checking the ₹50 lakh / ₹75 lakh limit before the year ends.
- A transporter with a few trucks working out the income to declare.
- Anyone who left the scheme in an earlier year and wants to know whether they can come back.
- Checking whether you need a chartered accountant’s tax audit this year, and by when.
The three presumptive schemes
- Business (Sl. No. 1; section 44AD): a resident individual, HUF or partnership firm (not an LLP) with turnover up to ₹2 crore, or ₹3 crore if cash receipts are 5% or less. Income: 6% of turnover received by account payee cheque, draft or electronic modes during the year or before the return due date, and 8% of the rest — or more. Not for commission or brokerage income, agency businesses, profit-linked deductions or anyone who also carries on a specified profession (section 58(11)).
- Profession (Sl. No. 3; section 44ADA): a resident individual or partnership firm (not an LLP, not an HUF) in a specified profession — legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, IT, company secretary and the notified ones — with receipts up to ₹50 lakh, or ₹75 lakh with cash at 5% or less. Income: 50% of receipts, or more.
- Goods carriages (Sl. No. 2; section 44AE): anyone who owns at most ten goods carriages at any time in the year. Income: ₹1,000 per ton of gross vehicle weight a month for a heavy goods vehicle (above 12,000 kg) and ₹7,500 a month for any other, counting a part month as a month — or more. A firm deducts partners’ salary and interest from it.
Books of account and the tax audit
Declaring the presumptive income removes the tax audit for that business (section 63(2); section 58(10) for goods carriages). Otherwise an audit is needed when business turnover exceeds ₹1 crore — ₹10 crore if cash receipts and cash payments are each 5% or less — or professional receipts exceed ₹50 lakh (section 63; 44AB). Under the 2025 Act, declaring less than the presumptive income with total income above the basic exemption limit also needs books and an audit (section 58(3)); under the 1961 Act a lower 44AD profit needed an audit only together with the five-year rule (section 44AB(e)), a lower 44ADA profit above the limit always (44AB(d)), and a lower 44AE profit always (44AB(c)).
Books are always required for a specified profession (section 62(1)(a); 44AA(1)) — rule 46 of the Income-tax Rules, 2026 lists them for most of these professions, though not for information technology or company secretaries — and for other businesses when income exceeded ₹2.5 lakh or turnover ₹25 lakh (₹1.2 lakh / ₹10 lakh for firms and others) in one of the three earlier years, or when a lower profit than the deemed profit is claimed (section 62(2)). The audit report is due one month before the return due date (section 63(5)(a)); missing it costs a fee of ₹75,000, or ₹1,50,000 after a month (section 428(c)).
The five-year rule
If you declare income under the business scheme for a year and then, in any of the next five years, declare a lower profit, you cannot use the scheme for the five years after that year (section 58(7); 44AD(4)). While the rule lasts, books and an audit are needed if your total income is above the basic exemption limit (section 58(8); 44AD(5)). The checker counts the years under section 44AD as well, as section 536(2) of the 2025 Act carries earlier options and obligations over. The rule covers the business scheme only, not professions or goods carriages.
Sources
- Income-tax Act, 2025 — sections 58, 62, 63, 263 and 536
- Finance Act, 2026 — sections 40 (section 58), 66 (return due dates) and 96 (section 428 fees)
- Income-tax Rules, 2026 — rules 46, 47 and 164
- Income-tax Act, 1961 (India Code) — sections 44AA, 44AB, 44AD, 44ADA and 44AE, for FY 2025-26
- CBDT Circular No. 7/2026 — the later return and audit report dates for audit cases, FY 2025-26
- Income-tax e-filing portal — ITR-4 validation rules
Limitations
- One business, one profession and one fleet of goods carriages at a time; separate businesses of the same kind should be added together.
- The total-income test uses the income you enter; it does not compute your tax. Use the income tax calculator for the tax itself.
- Turnover for the ₹10 crore audit limit uses the cash share you enter for receipts and a yes/no for cash payments.
- Section 58 is headed “certain residents”, but its goods-carriage entry names any assessee; non-residents with trucks should check their position.
- Where the 2025 Act reads differently from the 1961 Act (an audit for a lower 44AD-type profit outside the five-year rule), the checker follows the text and says so; confirm with your accountant.
Privacy
Everything happens in your browser. What you enter or open here is not uploaded or stored by MySmartCoPilot.
Frequently asked questions
Is a tax audit compulsory if my turnover is above ₹1 crore?
Not if you declare presumptive income under section 58 and stay within its ₹2 crore or ₹3 crore limit (section 63(2)). Otherwise the audit limit is ₹1 crore, or ₹10 crore when both cash receipts and cash payments are 5% or less of the totals. For FY 2025-26 the 1961 Act is narrower: its relief for section 44AD declarants (first proviso to section 44AB) is written for turnover up to ₹2 crore, and section 44AB(b) has no exception for section 44ADA above ₹50 lakh of receipts — the checker flags both cases for your accountant.
Can a freelancer or software developer use 44ADA?
Yes, if the work is one of the specified professions — information technology is named in section 62(4) of the 2025 Act — the gross receipts are within ₹50 lakh (₹75 lakh with cash at 5% or less), and you are a resident individual or a partnership firm. Half of the receipts is then your income.
What if my real profit is less than 8% or 6%?
You can declare it, but you then keep books of account and, under the 2025 Act, get a tax audit when your total income is above the basic exemption limit (section 58(3)). If you used the business scheme in any of the five years before, the five-year rule also starts.
When is the return due for a presumptive business?
For a business or profession without an audit, 31 August after the year ends (the Finance Act, 2026 moved it from 31 July); with an audit, 31 October, with the audit report one month earlier. For FY 2025-26 the CBDT extended the audit-case dates to 21 November for the return and 21 October for the report.
Do I need books of account under the presumptive scheme?
For a specified profession, yes — section 62(1)(a) requires them in any case. For a business on presumptive income, keep the records that show your turnover and how it was received (bank statements, sales bills): section 62 asks for books that let the Assessing Officer compute your income. A lower profit than the presumptive income needs full books.