If I am not wrong, in 44AD when your profit becomes less than 6/8%, one needs to opt out from 44AD and move to 44AB for the next 5 years with the 5-year audit.
But is there any relaxation regarding the Audit rule if the person is a senior citizen and/or if someone is moving from the old regime to the new tax regime?
Hi @harsh-sharma,
Yes, your understanding is correct. If someone opts for the presumptive taxation scheme for their business under section 44AD, they need to continue with the scheme for 5 years. In case they opt out, they have to undergo a tax audit for 5 years including the year in which they opt out.
No, there’s no exception available to this rule even if one is a senior citizen. Moreover, the choice of regime does not affect the audit applicability as well.
Hope this helps!
@Quicko if i had never opted for 44AD before , and im at loss i can opt for 44AB this year and not undergo tax audit right?
Hi @Yohan,
The applicability of a tax audit depends on your turnover and not profits or losses. In case of stock trading where 100% of the transactions are digital, tax audit is required only if your turnover exceeds ₹10Cr.
As far as the presumptive taxation scheme (44AD) is concerned, you can opt for it if the turnover is below ₹3Cr. If you do not opt-out for the next 5 years, tax audit won’t be necessary.
does it not matter even if i incur losses trading? Because if i opt for presumptive taxation i might have to do tax audit since profit is less than 6%