Tax Audit & Presumptive Scheme AY 2025-26: What’s New?
Tax audit applicability and presumptive scheme for AY 2025-26 have undergone significant changes over the years—especially after AY 2017–18. If you’re a small business owner, professional, or transporter, you need to know how Sections 44AB, 44AD, 44ADA, and 44AE apply today.
With ITR filing deadlines approaching, here’s a crisp, updated breakdown to avoid audit surprises.
1. Presumptive Scheme vs Tax Audit – Quick Overview
| Section | Eligible Assessee | Nature of Business/Profession | Presumptive Income Rate | Turnover Limit (AY 2025–26) | Audit Applicability |
|---|---|---|---|---|---|
| 44AD | Resident Individuals, HUFs, Firms | Eligible Business | 6% (digital), 8% (cash) | ₹3 crore | If income < 6%/8% OR income < basic exemption |
| 44ADA | Resident Individuals | Specified Professions | 50% | ₹75 lakh | If declared income < 50% or income < exemption |
| 44AE | Any taxpayer | Goods Transport Business | ₹1,000 per ton/day | Max 10 vehicles | Audit not required if within scope |
✅ Expert View: The enhanced turnover limit of ₹3 crore (business) and ₹75 lakh (professionals) applies only if 95% or more receipts are through banking channels. CBDT made this clear via Finance Act, 2023.
2. Who Needs Tax Audit in AY 2025–26?
As per Section 44AB of the Income-tax Act, audit is mandatory if:
- Business turnover exceeds ₹1 crore
✅ Or exceeds ₹10 crore if 95%+ transactions are digital (Sec 44AB(a)) - Professionals with gross receipts > ₹50 lakh
- Presumptive scheme opted but income < deemed income and total income exceeds basic exemption
- Declared income lower than prescribed % under Sections 44AD/ADA/AE
Recent Update: The threshold of ₹10 crore for digital business transactions was notified via CBDT Notification No. 10/2022 dated 14.02.2022.
3. Section 44AD: For Small Businesses
- Eligible persons: Resident Individual, HUF, Partnership firm (not LLP)
- Ineligible businesses: Commission agents, brokerage, plying/hiring/goods carriage
- Key Limits for AY 2025–26:
- Turnover ≤ ₹3 crore (95% digital receipts)
- Declare 6% (digital) or 8% (cash) of turnover as income
📌 Audit Trigger: If you declare income below 6%/8% and total income exceeds basic exemption (₹2.5L/₹3L/₹5L), you must get books audited.
4. Section 44ADA: For Freelancers & Professionals
- Eligible professions: Legal, medical, engineering, architecture, accountancy, technical consultancy, etc.
- Declare 50% of gross receipts as income
- Limit: ₹75 lakh (if 95%+ receipts are digital)
📌 Audit applies if:
- You declare <50% profit and
- Your total income exceeds exemption limit
5. Section 44AE: For Transporters
- Applicable for goods carriages (not more than 10 vehicles)
- Income = ₹1,000 per ton per month (for heavy vehicle)
- No need to maintain books or get audited if complying
🛑 More than 10 vehicles? You’re out of 44AE, audit applies as per 44AB.
FAQs
Q1. Can salaried persons with side business claim 44AD?
Yes, if other conditions are met. Salary income doesn’t bar eligibility for 44AD.
Q2. Can LLPs opt for 44AD or 44ADA?
No. LLPs are not allowed under 44AD/44ADA.
Q3. Is audit compulsory for loss-making businesses?
Yes, if you’re not under presumptive scheme and show a loss above ₹1 crore turnover.
Summary
Tax audit applicability and presumptive scheme for AY 2025–26 explained. Business limit is ₹3 crore, professionals ₹75 lakh (with 95% digital receipts). Know audit triggers under Sections 44AB, 44AD, 44ADA, and 44AE to avoid penalties and ensure compliance.
Final Tip: Don’t Miss the Fine Print
Many taxpayers miss out on presumptive scheme benefits or face surprise audit requirements due to incomplete knowledge of turnover conditions, digital receipts, or Section 44AB triggers. It’s smart to file your returns with expert help.