What are the current 44AD, 44ADA and 44AB limits, and what does the 5% cash test mean?
For AY 2024-25 onwards: s.44AD applies up to Rs. 2 crore turnover, or Rs. 3 crore where cash receipts are within 5%, at 8% (6% for receipts by account payee cheque or draft or electronic mode); s.44ADA up to Rs. 50 lakh, or Rs. 75 lakh on the same condition, at 50%. Audit under s.44AB is triggered at Rs. 1 crore turnover for business, Rs. 10 crore where cash receipts and cash payments are each within 5%, and Rs. 50 lakh gross receipts for a profession. The 5% cash cap is the same thing as routing more than 95% of transactions through banking channels.
Decided by the CBDT Circulars & Instructions (Income Tax Department, Government of India — official tutorial and FAQ published on incometaxindia.gov.in), reported as Departmental tutorial and FAQ; thresholds stated to be 'Applicable w.e.f. Assessment Year 2024-25'. It bears on section 44AD, section 44ADA, section 44AB, section 44AE of the Income Tax Act 1961, in Presumptive Taxation & Audit matters.
The thresholds have moved with successive Finance Acts and getting them wrong in a reply is expensive. Note the asymmetry: s.44AB applies a dual test — cash receipts and cash payments must each be within 5% — while ss.44AD and 44ADA test receipts only, so an assessee with heavy cash payments can still reach the Rs. 3 crore presumptive limit but not the Rs. 10 crore audit limit. And s.44AD(4) is not a bar on leaving the scheme: the consequence is a five-year disqualification, plus books under s.44AA(2) and audit under s.44AB once total income exceeds the exemption limit.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Chartered accountants replying to notices need a sourced statement of the current thresholds, because they have moved with successive Finance Acts. The Department publishes a tutorial on presumptive taxation and a FAQ on tax audit which set out the figures currently in force. Section 44AD applies to an eligible assessee carrying on an eligible business; section 44ADA to specified professionals; section 44AB imposes the audit obligation. The 'digital receipts' conditions in sections 44AD, 44ADA and 44AB are each expressed as a 5% cash cap, which is the same thing as a 95% non-cash requirement. Section 44AD(4) and (5) attach a consequence to opting out of the scheme once it has been claimed.
Section 44AD. An eligible assessee carrying on an eligible business is deemed to have profits of eight per cent of total turnover or gross receipts, or a higher sum claimed to have been earned; the rate is six per cent for so much of the turnover or gross receipts as is received by an account payee cheque, an account payee bank draft, use of electronic clearing system through a bank account or such other electronic mode as may be prescribed, received during the previous year or before the due date under section 139(1). An eligible assessee is a resident individual, Hindu undivided family or partnership firm, but not a limited liability partnership, and one who has not claimed deduction under sections 10A, 10AA, 10B or 10BA or under Chapter VIA Part C. An eligible business is any business except plying, hiring or leasing goods carriages under section 44AE, whose turnover or gross receipts do not exceed two crore rupees, read as three crore rupees where the amount or aggregate of amounts received in cash during the previous year does not exceed five per cent of turnover or gross receipts; a cheque or bank draft that is not account payee counts as cash for that test. Section 44AD does not apply at all to a person carrying on a profession referred to in section 44AA(1), to a person earning income in the nature of commission or brokerage, or to a person carrying on any agency business. Where an assessee declares profit under the section and then, for any of the five assessment years following, declares profit otherwise than under it, he loses the benefit of the section for five assessment years after the year of the non-conforming declaration, and if his total income then exceeds the maximum amount not chargeable to tax he must keep books under section 44AA(2) and get them audited under section 44AB. Section 44ADA. A resident individual or partnership firm other than a limited liability partnership, engaged in a profession referred to in section 44AA(1) whose total gross receipts do not exceed fifty lakh rupees, is deemed to have profits of fifty per cent of gross receipts or a higher sum claimed; fifty lakh becomes seventy-five lakh where cash receipts do not exceed five per cent of gross receipts, with the same deeming for non-account-payee cheques and drafts. An assessee claiming lower profits whose total income exceeds the maximum amount not chargeable to tax must keep books under section 44AA(1) and get them audited under section 44AB. Section 44AB. Audit is required of a person carrying on business whose sales, turnover or gross receipts exceed one crore rupees, read as ten crore rupees where both the aggregate of all amounts received in cash and the aggregate of all payments made in cash during the previous year are each within five per cent of receipts and payments respectively; a payment or receipt by a cheque or bank draft that is not account payee is deemed to be in cash. For a profession the limit is fifty lakh rupees of gross receipts. Audit is also required of a person whose profits are deemed under section 44AE, 44BB or 44BBB and who claims lower income; of a person whose profits are deemed under section 44ADA who claims lower income and whose income exceeds the maximum amount not chargeable to tax; and of a person to whom section 44AD(4) applies and whose income exceeds that amount. Section 44AB does not apply to a person who declares profits under section 44AD(1) or section 44ADA(1). The report must be obtained and furnished by the specified date, which is one month prior to the due date for furnishing the return under section 139(1). Section 44AE. It applies to an assessee who owns not more than ten goods carriages at any time during the previous year and is engaged in plying, hiring or leasing them. For a heavy goods vehicle - a goods carriage whose gross vehicle weight exceeds 12,000 kilograms - the deemed profit is one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month of ownership in the previous year, or the amount claimed to have been actually earned from that vehicle, whichever is higher; for any other goods carriage it is seven thousand five hundred rupees for every month or part of a month of ownership, or the amount claimed to have been actually earned from it, whichever is higher. Sections 44AA and 44AB do not apply so far as they relate to that business, and its receipts are excluded in computing the monetary limits under those sections; an assessee may claim lower profits if he keeps books under section 44AA(2) and gets them audited under section 44AB.
The five per cent tests are not what they look like. Section 44AB imposes a dual test - cash receipts and cash payments must each be within five per cent - whereas sections 44AD and 44ADA impose a receipts-only test, so an assessee with heavy cash payments can still reach the three crore presumptive limit but not the ten crore audit limit. In all three sections a cheque or bank draft that is not account payee is deemed to be cash, so an ordinary bearer or crossed cheque counts against the five per cent even though it went through a bank. That is the point to check first on a notice, and it is why the Department's shorthand about transactions routed through banking channels is a paraphrase rather than the test. The displacement of the audit obligation works differently for each scheme, and the difference matters. The first proviso to section 44AB names only a person who declares profits under section 44AD(1) or section 44ADA(1); it does not mention section 44AE. A section 44AE assessee is taken out by section 44AE(5), which disapplies sections 44AA and 44AB so far as they relate to that business and excludes its receipts in computing the monetary limits, while section 44AB(c) brings the audit back if he claims income lower than the deemed figure. For section 44ADA the audit returns under section 44AB(d) only where the assessee both claims lower profits and has income above the maximum amount not chargeable to tax. Section 44AD(4) is not a bar on leaving the scheme as such. Its consequence is a five-year disqualification running from the assessment year in which the profit was not declared in accordance with sub-section (1), coupled with the books-and-audit obligation in sub-section (5) once total income exceeds the maximum amount not chargeable to tax. Section 44AD also carries an eligibility screen that is easy to miss: a limited liability partnership, a company, a non-resident, a professional, a commission or brokerage earner and an agency business are all outside it, whatever the turnover. For assessment year 2026-27 the maximum amount not chargeable to tax that feeds sections 44AB(d) and 44AB(e) is four lakh rupees under the new regime, the Finance Act 2025 having inserted a table into section 115BAC(1A) for assessment years beginning on or after 1 April 2026 in which income up to Rs. 4,00,000 is taxed at nil.
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
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Handle my notice → Ask a CA on WhatsAppFor AY 2024-25 onwards: s.44AD applies up to Rs. 2 crore turnover, or Rs. 3 crore where cash receipts are within 5%, at 8% (6% for receipts by account payee cheque or draft or electronic mode); s.44ADA up to Rs. 50 lakh, or Rs. 75 lakh on the same condition, at 50%. Audit under s.44AB is triggered at Rs. 1 crore turnover for business, Rs. 10 crore where cash receipts and cash payments are each within 5%, and Rs. 50 lakh gross receipts for a profession. The 5% cash cap is the same thing as routing more than 95% of transactions through banking channels. This was decided by the CBDT Circulars & Instructions (Income Tax Department, Government of India — official tutorial and FAQ published on incometaxindia.gov.in) and bears on section 44AD, section 44ADA, section 44AB, section 44AE of the Income Tax Act 1961. It is reported as Departmental tutorial and FAQ; thresholds stated to be 'Applicable w.e.f. Assessment Year 2024-25'. The thresholds have moved with successive Finance Acts and getting them wrong in a reply is expensive. Note the asymmetry: s.44AB applies a dual test — cash receipts and cash payments must each be within 5% — while ss.44AD and 44ADA test receipts only, so an assessee with heavy cash payments can still reach the Rs. 3 crore presumptive limit but not the Rs. 10 crore audit limit. And s.44AD(4) is not a bar on leaving the scheme: the consequence is a five-year disqualification, plus books under s.44AA(2) and audit under s.44AB once total income exceeds the exemption limit. If it applies to you, the first step is this: Test cash receipts and cash payments separately against 5% before claiming the enhanced Rs. 3 crore or Rs. 10 crore limit.
Chartered accountants replying to notices need a sourced statement of the current thresholds, because they have moved with successive Finance Acts. The Department publishes a tutorial on presumptive taxation and a FAQ on tax audit which set out the figures currently in force. Section 44AD applies to an eligible assessee carrying on an eligible business; section 44ADA to specified professionals; section 44AB imposes the audit obligation. The 'digital receipts' conditions in sections 44AD, 44ADA and 44AB are each expressed as a 5% cash cap, which is the same thing as a 95% non-cash requirement. Section 44AD(4) and (5) attach a consequence to opting out of the scheme once it has been claimed. It was decided by the CBDT Circulars & Instructions (Income Tax Department, Government of India — official tutorial and FAQ published on incometaxindia.gov.in). On those facts the CBDT Circulars & Instructions held as follows. Section 44AD. An eligible assessee carrying on an eligible business is deemed to have profits of eight per cent of total turnover or gross receipts, or a higher sum claimed to have been earned; the rate is six per cent for so much of the turnover or gross receipts as is received by an account payee cheque, an account payee bank draft, use of electronic clearing system through a bank account or such other electronic mode as may be prescribed, received during the previous year or before the due date under section 139(1). An eligible assessee is a resident individual, Hindu undivided family or partnership firm, but not a limited liability partnership, and one who has not claimed deduction under sections 10A, 10AA, 10B or 10BA or under Chapter VIA Part C. An eligible business is any business except plying, hiring or leasing goods carriages under section 44AE, whose turnover or gross receipts do not exceed two crore rupees, read as three crore rupees where the amount or aggregate of amounts received in cash during the previous year does not exceed five per cent of turnover or gross receipts; a cheque or bank draft that is not account payee counts as cash for that test. Section 44AD does not apply at all to a person carrying on a profession referred to in section 44AA(1), to a person earning income in the nature of commission or brokerage, or to a person carrying on any agency business. Where an assessee declares profit under the section and then, for any of the five assessment years following, declares profit otherwise than under it, he loses the benefit of the section for five assessment years after the year of the non-conforming declaration, and if his total income then exceeds the maximum amount not chargeable to tax he must keep books under section 44AA(2) and get them audited under section 44AB. Section 44ADA. A resident individual or partnership firm other than a limited liability partnership, engaged in a profession referred to in section 44AA(1) whose total gross receipts do not exceed fifty lakh rupees, is deemed to have profits of fifty per cent of gross receipts or a higher sum claimed; fifty lakh becomes seventy-five lakh where cash receipts do not exceed five per cent of gross receipts, with the same deeming for non-account-payee cheques and drafts. An assessee claiming lower profits whose total income exceeds the maximum amount not chargeable to tax must keep books under section 44AA(1) and get them audited under section 44AB. Section 44AB. Audit is required of a person carrying on business whose sales, turnover or gross receipts exceed one crore rupees, read as ten crore rupees where both the aggregate of all amounts received in cash and the aggregate of all payments made in cash during the previous year are each within five per cent of receipts and payments respectively; a payment or receipt by a cheque or bank draft that is not account payee is deemed to be in cash. For a profession the limit is fifty lakh rupees of gross receipts. Audit is also required of a person whose profits are deemed under section 44AE, 44BB or 44BBB and who claims lower income; of a person whose profits are deemed under section 44ADA who claims lower income and whose income exceeds the maximum amount not chargeable to tax; and of a person to whom section 44AD(4) applies and whose income exceeds that amount. Section 44AB does not apply to a person who declares profits under section 44AD(1) or section 44ADA(1). The report must be obtained and furnished by the specified date, which is one month prior to the due date for furnishing the return under section 139(1). Section 44AE. It applies to an assessee who owns not more than ten goods carriages at any time during the previous year and is engaged in plying, hiring or leasing them. For a heavy goods vehicle - a goods carriage whose gross vehicle weight exceeds 12,000 kilograms - the deemed profit is one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month of ownership in the previous year, or the amount claimed to have been actually earned from that vehicle, whichever is higher; for any other goods carriage it is seven thousand five hundred rupees for every month or part of a month of ownership, or the amount claimed to have been actually earned from it, whichever is higher. Sections 44AA and 44AB do not apply so far as they relate to that business, and its receipts are excluded in computing the monetary limits under those sections; an assessee may claim lower profits if he keeps books under section 44AA(2) and gets them audited under section 44AB.
The five per cent tests are not what they look like. Section 44AB imposes a dual test - cash receipts and cash payments must each be within five per cent - whereas sections 44AD and 44ADA impose a receipts-only test, so an assessee with heavy cash payments can still reach the three crore presumptive limit but not the ten crore audit limit. In all three sections a cheque or bank draft that is not account payee is deemed to be cash, so an ordinary bearer or crossed cheque counts against the five per cent even though it went through a bank. That is the point to check first on a notice, and it is why the Department's shorthand about transactions routed through banking channels is a paraphrase rather than the test. The displacement of the audit obligation works differently for each scheme, and the difference matters. The first proviso to section 44AB names only a person who declares profits under section 44AD(1) or section 44ADA(1); it does not mention section 44AE. A section 44AE assessee is taken out by section 44AE(5), which disapplies sections 44AA and 44AB so far as they relate to that business and excludes its receipts in computing the monetary limits, while section 44AB(c) brings the audit back if he claims income lower than the deemed figure. For section 44ADA the audit returns under section 44AB(d) only where the assessee both claims lower profits and has income above the maximum amount not chargeable to tax. Section 44AD(4) is not a bar on leaving the scheme as such. Its consequence is a five-year disqualification running from the assessment year in which the profit was not declared in accordance with sub-section (1), coupled with the books-and-audit obligation in sub-section (5) once total income exceeds the maximum amount not chargeable to tax. Section 44AD also carries an eligibility screen that is easy to miss: a limited liability partnership, a company, a non-resident, a professional, a commission or brokerage earner and an agency business are all outside it, whatever the turnover. For assessment year 2026-27 the maximum amount not chargeable to tax that feeds sections 44AB(d) and 44AB(e) is four lakh rupees under the new regime, the Finance Act 2025 having inserted a table into section 115BAC(1A) for assessment years beginning on or after 1 April 2026 in which income up to Rs. 4,00,000 is taxed at nil. In the words reproduced by the source cited on this page: "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"
It was decided by the CBDT Circulars & Instructions and is reported as Departmental tutorial and FAQ; thresholds stated to be 'Applicable w.e.f. Assessment Year 2024-25'. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 44AD, section 44ADA, section 44AB, section 44AE, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Section 44AD. An eligible assessee carrying on an eligible business is deemed to have profits of eight per cent of total turnover or gross receipts, or a higher sum claimed to have been earned; the rate is six per cent for so much of the turnover or gross receipts as is received by an account payee cheque, an account payee bank draft, use of electronic clearing system through a bank account or such other electronic mode as may be prescribed, received during the previous year or before the due date under section 139(1). An eligible assessee is a resident individual, Hindu undivided family or partnership firm, but not a limited liability partnership, and one who has not claimed deduction under sections 10A, 10AA, 10B or 10BA or under Chapter VIA Part C. An eligible business is any business except plying, hiring or leasing goods carriages under section 44AE, whose turnover or gross receipts do not exceed two crore rupees, read as three crore rupees where the amount or aggregate of amounts received in cash during the previous year does not exceed five per cent of turnover or gross receipts; a cheque or bank draft that is not account payee counts as cash for that test. Section 44AD does not apply at all to a person carrying on a profession referred to in section 44AA(1), to a person earning income in the nature of commission or brokerage, or to a person carrying on any agency business. Where an assessee declares profit under the section and then, for any of the five assessment years following, declares profit otherwise than under it, he loses the benefit of the section for five assessment years after the year of the non-conforming declaration, and if his total income then exceeds the maximum amount not chargeable to tax he must keep books under section 44AA(2) and get them audited under section 44AB. Section 44ADA. A resident individual or partnership firm other than a limited liability partnership, engaged in a profession referred to in section 44AA(1) whose total gross receipts do not exceed fifty lakh rupees, is deemed to have profits of fifty per cent of gross receipts or a higher sum claimed; fifty lakh becomes seventy-five lakh where cash receipts do not exceed five per cent of gross receipts, with the same deeming for non-account-payee cheques and drafts. An assessee claiming lower profits whose total income exceeds the maximum amount not chargeable to tax must keep books under section 44AA(1) and get them audited under section 44AB. Section 44AB. Audit is required of a person carrying on business whose sales, turnover or gross receipts exceed one crore rupees, read as ten crore rupees where both the aggregate of all amounts received in cash and the aggregate of all payments made in cash during the previous year are each within five per cent of receipts and payments respectively; a payment or receipt by a cheque or bank draft that is not account payee is deemed to be in cash. For a profession the limit is fifty lakh rupees of gross receipts. Audit is also required of a person whose profits are deemed under section 44AE, 44BB or 44BBB and who claims lower income; of a person whose profits are deemed under section 44ADA who claims lower income and whose income exceeds the maximum amount not chargeable to tax; and of a person to whom section 44AD(4) applies and whose income exceeds that amount. Section 44AB does not apply to a person who declares profits under section 44AD(1) or section 44ADA(1). The report must be obtained and furnished by the specified date, which is one month prior to the due date for furnishing the return under section 139(1). Section 44AE. It applies to an assessee who owns not more than ten goods carriages at any time during the previous year and is engaged in plying, hiring or leasing them. For a heavy goods vehicle - a goods carriage whose gross vehicle weight exceeds 12,000 kilograms - the deemed profit is one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month of ownership in the previous year, or the amount claimed to have been actually earned from that vehicle, whichever is higher; for any other goods carriage it is seven thousand five hundred rupees for every month or part of a month of ownership, or the amount claimed to have been actually earned from it, whichever is higher. Sections 44AA and 44AB do not apply so far as they relate to that business, and its receipts are excluded in computing the monetary limits under those sections; an assessee may claim lower profits if he keeps books under section 44AA(2) and gets them audited under section 44AB. It arises in Presumptive Taxation & Audit matters, on section 44AD, section 44ADA, section 44AB, section 44AE of the Income Tax Act 1961, and was decided by Income Tax Department, Government of India — official tutorial and FAQ published on incometaxindia.gov.in. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Where income is offered under s.44AD, s.44ADA or s.44AE at or above the presumptive figure, take the point that the audit obligation does not arise at all unless lower profits are claimed. Before opting out of s.44AD, work through the five-year consequence and whether total income will exceed the basic exemption limit, which brings in books and audit. Treat these as the department's published position, binding on the officer, and go to the bare section when a figure is actually in dispute.
Still good law. Every figure in this entry has now been checked against the bare sections on the Acts module rather than against the departmental tutorial: section 44AD carries the two crore and three crore limits, the five per cent cash test and the eight and six per cent rates; section 44ADA carries fifty lakh, seventy-five lakh and fifty per cent; section 44AB carries one crore, ten crore on the dual five per cent test, and fifty lakh for a profession; section 44AE carries one thousand rupees per ton for a heavy goods vehicle and seven thousand five hundred rupees otherwise, in each case subject to the higher amount actually earned. The basic exemption limit of Rs. 4,00,000 for assessment year 2026-27 under the new regime is confirmed from section 25 of the Finance Act 2025, which inserts the table into section 115BAC(1A) for assessment years beginning on or after 1 April 2026. Recodification: the Income-tax Act 1961 is shown as repealed, and the concordance carries sections 44AD, 44ADA and 44AE alike into section 58 of the Income-tax Act 2025, section 44AB into section 63 (read with sections 58 and 2), and section 115BAC into section 202, for tax years beginning on or after 1 April 2026. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The thresholds in this entry no longer rest on the departmental tutorial and FAQ. Sections 44AD, 44ADA, 44AB and 44AE were read in full in their current form, and every figure checks out. Four things the earlier version left out are worth the attention of anyone answering a notice. First, a cheque or bank draft that is not account payee is deemed to be cash for all of the five per cent tests, so money that went through a bank can still fail them. Second, section 44AD(6) puts professionals, commission and brokerage earners and agency businesses outside the scheme altogether, and the definition of eligible assessee excludes limited liability partnerships, companies and non-residents, whatever the turnover; section 44ADA is likewise confined to a resident individual or a partnership firm that is not an LLP. Third, the section 44AE figures are floors, not fixed amounts - the deemed profit is the statutory rate or the amount claimed to have been actually earned from the vehicle, whichever is higher - and the scheme is available only to an owner of not more than ten goods carriages, a heavy goods vehicle being one whose gross vehicle weight exceeds 12,000 kilograms. Fourth, the audit exemption in the first proviso to section 44AB names only sections 44AD(1) and 44ADA(1); a section 44AE assessee is exempted instead by section 44AE(5), and section 44AB(c) brings the audit back if he claims lower profits. The Rs. 4,00,000 basic exemption limit for assessment year 2026-27 is confirmed from section 25 of the Finance Act 2025. Note finally that the Income-tax Act 1961 is now shown as repealed and that from the tax year beginning 1 April 2026 these provisions are sections 58 and 63 of the Income-tax Act 2025. The provisos that were previously unavailable have been read, so the figures are no longer second-hand. What this entry still does not give you is judicial authority. No decision construing section 44AD(4) itself was traced in this pass; searches on the sections surfaced Anandkumar v. ACIT [2020] 122 taxmann.com 252 (Madras), Nitin Nema v. PCCIT [2023] 155 taxmann.com 276 (MP) and Prabhakar Nerulkar v. PCIT [2025] 178 taxmann.com 489 (Bombay) among others, none of which has been read. Nothing here tells you how the five per cent tests apply where receipts and payments straddle two years, nor how the 'other electronic mode as may be prescribed' in the first proviso to section 44AD(1) has been prescribed by rule. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Section 44AD. An eligible assessee carrying on an eligible business is deemed to have profits of eight per cent of total turnover or gross receipts, or a higher sum claimed to have been earned; the rate is six per cent for so much of the turnover or gross receipts as is received by an account payee cheque, an account payee bank draft, use of electronic clearing system through a bank account or such other electronic mode as may be prescribed, received during the previous year or before the due date under section 139(1). An eligible assessee is a resident individual, Hindu undivided family or partnership firm, but not a limited liability partnership, and one who has not claimed deduction under sections 10A, 10AA, 10B or 10BA or under Chapter VIA Part C. An eligible business is any business except plying, hiring or leasing goods carriages under section 44AE, whose turnover or gross receipts do not exceed two crore rupees, read as three crore rupees where the amount or aggregate of amounts received in cash during the previous year does not exceed five per cent of turnover or gross receipts; a cheque or bank draft that is not account payee counts as cash for that test. Section 44AD does not apply at all to a person carrying on a profession referred to in section 44AA(1), to a person earning income in the nature of commission or brokerage, or to a person carrying on any agency business. Where an assessee declares profit under the section and then, for any of the five assessment years following, declares profit otherwise than under it, he loses the benefit of the section for five assessment years after the year of the non-conforming declaration, and if his total income then exceeds the maximum amount not chargeable to tax he must keep books under section 44AA(2) and get them audited under section 44AB. Section 44ADA. A resident individual or partnership firm other than a limited liability partnership, engaged in a profession referred to in section 44AA(1) whose total gross receipts do not exceed fifty lakh rupees, is deemed to have profits of fifty per cent of gross receipts or a higher sum claimed; fifty lakh becomes seventy-five lakh where cash receipts do not exceed five per cent of gross receipts, with the same deeming for non-account-payee cheques and drafts. An assessee claiming lower profits whose total income exceeds the maximum amount not chargeable to tax must keep books under section 44AA(1) and get them audited under section 44AB. Section 44AB. Audit is required of a person carrying on business whose sales, turnover or gross receipts exceed one crore rupees, read as ten crore rupees where both the aggregate of all amounts received in cash and the aggregate of all payments made in cash during the previous year are each within five per cent of receipts and payments respectively; a payment or receipt by a cheque or bank draft that is not account payee is deemed to be in cash. For a profession the limit is fifty lakh rupees of gross receipts. Audit is also required of a person whose profits are deemed under section 44AE, 44BB or 44BBB and who claims lower income; of a person whose profits are deemed under section 44ADA who claims lower income and whose income exceeds the maximum amount not chargeable to tax; and of a person to whom section 44AD(4) applies and whose income exceeds that amount. Section 44AB does not apply to a person who declares profits under section 44AD(1) or section 44ADA(1). The report must be obtained and furnished by the specified date, which is one month prior to the due date for furnishing the return under section 139(1). Section 44AE. It applies to an assessee who owns not more than ten goods carriages at any time during the previous year and is engaged in plying, hiring or leasing them. For a heavy goods vehicle - a goods carriage whose gross vehicle weight exceeds 12,000 kilograms - the deemed profit is one thousand rupees per ton of gross vehicle weight or unladen weight, as the case may be, for every month or part of a month of ownership in the previous year, or the amount claimed to have been actually earned from that vehicle, whichever is higher; for any other goods carriage it is seven thousand five hundred rupees for every month or part of a month of ownership, or the amount claimed to have been actually earned from it, whichever is higher. Sections 44AA and 44AB do not apply so far as they relate to that business, and its receipts are excluded in computing the monetary limits under those sections; an assessee may claim lower profits if he keeps books under section 44AA(2) and gets them audited under section 44AB.
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