Moment guide · FY 2026-27
I run a small business — do I need to maintain accounts?
Do I need to maintain books of accounts or get my accounts audited if I run a small business or practice a specified profession?
No — 44AD lets a small business declare 6% of digital receipts (8% of cash) as taxable profit, and 44ADA lets specified professionals declare 50% of gross receipts, without maintaining books or getting audited. 44AD applies up to ₹3 crore turnover (₹2 crore if cash receipts exceed 5%), and 44ADA up to ₹75 lakh.
Your legitimate options
Every route the statute actually gives you — with its condition, cap and deadline.
| Route | Condition | Cap / deadline |
|---|---|---|
| 44AD presumptive taxation | Eligible small business; turnover up to ₹3 crore AND cash receipts up to 5% of total receipts (else the limit is ₹2 crore) | 6% (digital) / 8% (cash) of turnover deemed profit; no books, no 44AB audit; 5-year lock under 44AD(4) |
| 44ADA presumptive for professionals | Specified profession (doctor, architect, CA, advocate, engineer, interior designer, film artist, authorised representative, company secretary); turnover up to ₹75 lakh | 50% of gross receipts deemed profit; no books, no audit |
| Maintain regular books | Turnover above the limits, actual profit is lower than presumptive, or you trade in F&O/derivatives | Full accounts required; tax audit u/s 44AB applies at the relevant turnover thresholds |
The #1 trap
Presumptive profit is a legal floor, not a cap — declaring 6%/8% is safe even if real profit is higher, but once you opt out you cannot return to 44AD for 5 years.
The decision path
Follow it top to bottom — the first condition that matches is your answer.
Worked example
Ramesh, digital marketing agency owner in Jaipur
Ramesh's agency had ₹2.2 crore from online campaigns and ₹5 lakh from local cash customers in FY 2026-27. Total receipts were ₹2.25 crore, so cash was only 0.22% — under the 5% ceiling, which keeps the ₹3 crore limit alive. Under 44AD he declares 6% of the digital receipts: 0.06 × ₹2,20,00,000 = ₹13,20,000, plus 8% of cash: ₹40,000. Total presumptive business income is ₹13,60,000. No books, no tax audit. In the old regime his tax would be ₹2,29,320 including cess, while in the new regime — where no 80C is allowed but slabs are lower — it is about ₹87,360 including cess, so he opts for the new regime. His friend Meera, a consulting architect earning ₹60 lakh in fee income, uses 44ADA all the time: if she chooses the presumptive route she declares ₹30 lakh, but her real profit is only ₹22 lakh, so she must declare the real ₹22 lakh — the presumptive figure is only a minimum floor. If next year Ramesh wants to claim actual expenses and leaves 44AD, the clock starts: he cannot return to presumptive taxation for 5 assessment years, so he should model both cash flows before switching. A quick call with us dials in the final figure.
Questions people actually ask
Sections: 44AD, 44ADA, 44AD(4), 44AB · Last verified 2026-08-11 · Reviewed by Harun Raaj & Associates, Chartered Accountants. Every figure cites the Income-tax Act, 1961 (with ITA 2025 mapping via our section index).