The article explains the applicability of Section 44AD to non-specified professions that are not covered under Section 44AA(1) of the Income Tax Act. It clarifies that specified professionals such as legal practitioners, doctors, engineers, architects, chartered accountants, company secretaries, and others listed under Section 44AA are not eligible for Section 44AD and instead fall under Section 44ADA. Non-specified professionals, including those not listed under Section 44AA(1), may opt for Section 44AD, provided they meet eligibility conditions. The section applies only to resident individuals, Hindu Undivided Families (HUFs), and partnership firms, while LLPs, companies, and other entities are excluded. The prescribed turnover limit is ₹2 crore, which may extend to ₹3 crore if cash receipts do not exceed 5% of total receipts. A minimum profit of 6% or 8% of gross receipts must be declared; otherwise, tax audit provisions under Section 44AB(e) may apply if income exceeds the basic exemption limit. The article further explains that opting for Section 44AD is optional but carries conditions, including restrictions if the scheme is discontinued within five years. It also outlines various practical scenarios demonstrating when tax audit is required under Sections 44AB(b) or 44AB(e), depending on turnover, profit percentage, and whether Section 44AD has been opted. The analysis concludes that audit applicability depends on turnover thresholds, profit declaration, and prior use of presumptive taxation.
1. Coverage of this article:
- In this article, I am discussing the applicability of Section 44AD to various types of non-specified professions which are not covered u/s 44AA.
- I will also cover the applicability of tax audit cases where the assessee is covered u/s 44ADA or 44AD.
2. Section 44AD applicability:
- It is applicable on non-specified profession which is not covered u/s 44AA(1).
- All types of professionals or consultants are not eligible to opt the Section 44AD.
3. List of specified professionals:
- Legal services (Advocate)
- Engineer
- Interior decoration
- Medical profession (Doctor)
- Profession of accountancy (Chartered Accountant)
- Company Secretary
- Architecture
- Information technology
- Technical consultancy
- Cost Management accountant
- Other specified profession i.e. film artists
Only above-mentioned professions are eligible to opt 44ADA. Remaining professionals are eligible to opt Section 44AD.
4. Non specified professionals:
Professions other than above who is not covered here are eligible to opt the Section 44AD instead of declaring the income u/s 44ADA.
a. Bare Act of Sec 44AD(6):
The provisions of this section i.e 44AD, notwithstanding anything contained in the foregoing provisions, shall not apply to—
| (i) | a person carrying on profession as referred to in sub-section (1) of section 44AA; | |
| (ii) | a person earning income in the nature of commission or brokerage; or | |
| (iii) | a person carrying on any agency business. |
b. A person who has completed their B. Com or M. Com & providing professional services like filing of ITR & GST returns are eligible to opt the Section 44AD because they are not covered in specified profession. If such people providing the same services, they can-not be treated as a professional.
5. Eligible assessee u/s 44AD:
| S No | Nature of Assessee | Applicability of 44AD |
| 1 | Individual who is a resident | Yes |
| 2 | HUF who is a resident | Yes |
| 3 | Partnership firm who is a resident | Yes |
| 4 | LLP who is a resident | No |
| 5 | Company who is a resident | No |
| 6 | Society who is a resident | No |
| 7 | Trust who is a resident | No |
| 8 | Individual who is a non-resident | No |
| 9 | HUF who is a non-resident | No |
| 10 | Partnership firm who is a non-resident | No |
| 11 | LLP who is a non-resident | No |
| 12 | Company who is a non-resident | No |
| 13 | Society who is a non-resident | No |
| 14 | Trust who is a non-resident | No |
| 15 | Others | No |
- Only Individual, HUF & partnership firm, who is a resident, are eligible person who can go for 44AD.
- The other types of categories are not eligible to take the benefit of this presumptive taxation scheme us 44AD.
6. Threshold limit for Section 44AD:
- If total gross receipts of non-specified professions does not exceeds 2,00,00,000 then eligible assessee can opt this section.
- There is no such restriction whether you have received the money in cash or not.
- Minimum 6% or 8% profit should be declared.
7. Minimum profit to be declared:
Under this section, minimum profit should be equal to 6% or 8% of total gross receipts. If this condition is not fulfilled by the person, then audit will be mandatory us 44AB(e) if total income exceeds the basic exemption limit.
Bare Act of Sec 44AD:
(4) Where an eligible assessee declares profit for any previous year in accordance with the provisions of this section and he declares profit for any of the five assessment years relevant to the previous year succeeding such previous year not in accordance with the provisions of sub-section (1), he shall not be eligible to claim the benefit of the provisions of this section for five assessment years subsequent to the assessment year relevant to the previous year in which the profit has not been declared in accordance with the provisions of sub-section (1).
(5) Notwithstanding anything contained in the foregoing provisions of this section, an eligible assessee to whom the provisions of sub-section (4) are applicable and whose total income exceeds the maximum amount which is not chargeable to income-tax, shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.
8. Enhancement of limit:
- Assessee is also eligible to opt this section when his gross receipts does not exceeds 3,00,00,000 provided that amount received in cash during the year does not exceeds the 5% of total amount received during the year.
- This restriction is applicable when gross receipts exceeds the limit of 2,00,00,000 but does not exceeds the limit of 3,00,00,000.
- There is no condition for payment. It means you can pay the expenses in cash or via bank.
9. Optional or mandatory:
Section 44AD is optional for non-specified professional.
10. 44AD & 44ADA for non-specified professions:
| S No | Nature of Assessee | Applicability of 44ADA | Applicability of 44AD |
| 1 | Individual who is a resident | No | Yes |
| 2 | HUF who is a resident | No | Yes |
| 3 | Partnership firm who is a resident | No | Yes |
| 4 | LLP who is a resident | No | No |
| 5 | Company who is a resident | No | No |
| 6 | Society who is a resident | No | No |
| 7 | Trust who is a resident | No | No |
| 8 | Individual who is a non-resident | No | No |
| 9 | HUF who is a non-resident | No | No |
| 10 | Partnership firm who is a non-resident | No | No |
| 11 | LLP who is a non resident | No | No |
| 12 | Company who is a non resident | No | No |
| 13 | Society who is a non resident | No | No |
| 14 | Trust who is a non resident | No | No |
| 15 | Others | No | No |
If a person engaged in non-specified profession which is not covered u/s 44AA & they are eligible assessee in such cases they can opt the Section 44AD.
11. Non specified professions which is not covered u/s 44AA:
Profession which is not covered in point no. 3 are eligible to opt the Section 44AD but this is restricted to Individual, HUF & Partnership firm who is a resident.
| S No | Nature of Assessee | Applicability of 44AD |
| 1 | Individual who is a resident | Yes |
| 2 | HUF who is a resident | Yes |
| 3 | Partnership firm who is a resident | Yes |
| 4 | LLP who is a resident | No |
| 5 | Company who is a resident | No |
| 6 | Society who is a resident | No |
| 7 | Trust who is a resident | No |
| 8 | Individual who is a non resident | No |
| 9 | HUF who is a non resident | No |
| 10 | Partnership firm who is a non resident | No |
| 11 | LLP who is a non resident | No |
| 12 | Company who is a non resident | No |
| 13 | Society who is a non resident | No |
| 14 | Trust who is a non resident | No |
| 15 | Others | No |
- Other professionals or consultants which is not covered u/s 44AA can opt the Section 44AD.
12. Profession covered us 44AB(b):
- Those professions are specified us 44AA(1) are covered u/s 44AB(b).
- Non specified profession are also covered u/s 44AB(b).
- All types of assessee are covered under this section. It may be individual, HUF, LLP, Company and others.
13. Practical scenario 1:
Suppose Mr. Ram is engaged in non-specified profession & eligible for 44AD. He has opted the Section 44AD & assuming that all transaction are from bank:
| S No | Particulars | % of profit | Amount |
| 1 | Gross receipts | 40,00,000 | |
| 2 | Profit declared | 10% | 4,00,000 |
Profit declared by Ram is not less than 6% us 44AD. Hence, there is no requirement of audit.
14. Practical scenario 2:
Suppose Mr. Ram is engaged in non-specified profession & eligible for 44AD. He has not opted the Section 44AD & assuming that all transaction are from bank:
| S No | Particulars | % of profit | Amount |
| 1 | Gross receipts | 40,00,000 | |
| 2 | Profit declared | 5% | 2,00,000 |
Profit declared by Ram is less than 6% us 44AD but he has never opted the Section 44AD. Hence, there is no requirement of audit us 44AB(b) because receipts does not exceeds 50,00,000 & 44AB(e).
15. Practical scenario 3:
Suppose Mr. Ram is engaged in non-specified profession & eligible for 44AD. He has not opted the Section 44AD & assuming that all transaction are from bank:
| S No | Particulars | % of profit | Amount |
| 1 | Gross receipts | 60,00,000 | |
| 2 | Profit declared | 10% | 6,00,000 |
Profit declared by Ram is not less than 6% us 44AD but he has not opted the Section 44AD. So, percentage of profit is not relevant in this case. Hence, there is a requirement of audit us 44AB(b) because receipts exceeds the 50,00,000 instead of 44AB(e).
16. Practical scenario 4:
Suppose Mr. Ram is engaged in non-specified profession & eligible for 44AD. He has opted the Section 44AD & assuming that all transaction are from bank:
| S No | Particulars | % of profit | Amount |
| 1 | Gross receipts | 1,50,00,000 | |
| 2 | Profit declared | 10% | 15,00,000 |
Profit declared by Ram is not less than 6% us 44AD & he has opted the Section 44AD. So, percentage of profit is relevant in this case. Hence, there is no requirement of audit us 44AB(b) & 44AB(e).
17. Practical scenario 5:
Suppose Mr. Ram is engaged in non-specified profession & eligible for 44AD. He has not opted the Section 44AD & assuming that all transaction are from bank:
| S No | Particulars | % of profit | Amount |
| 1 | Gross receipts | 1,50,00,000 | |
| 2 | Profit declared | 10% | 15,00,000 |
Profit declared by Ram is not less than 6% us 44AD but he has not opted the Section 44AD. So, percentage of profit is not relevant in this case. Hence, there is a requirement of audit us 44AB(b) because receipts exceeds the 50,00,000 instead of 44AB(e).
18. Practical scenario 6:
Suppose Mr. Ram is engaged in non-specified profession & eligible for 44AD. He has opted the Section 44AD in previous year but not in the subsequent year & assuming that all transaction are from bank:
| S No | Particulars | % of profit | Amount |
| 1 | Gross receipts | 1,50,00,000 | |
| 2 | Profit declared | 5% | 7,50,000 |
Profit declared by Ram is less than 6% us 44AD & he has opted the Section 44AD in previous year but not in the next year. If he declares the profit less than 6% & total income exceeds the basic exemption limit then there is a requirement of audit us 44AB(e) instead of 44AB(b).
19. Practical scenario 7:
Suppose Mr. Ram is engaged in non-specified profession & eligible for 44AD. He has opted the Section 44AD in previous year & assuming that all transaction are from bank:
| S No | Particulars | % of profit | Amount |
| 1 | Gross receipts | 4,50,00,000 | |
| 2 | Profit declared | 10% | 45,00,000 |
Profit declared by Ram is not less than 6% us 44AD & he has opted the Section 44AD in previous year. But he can-not opt the 44AD in this year because receipts exceeds the 3,00,00,000. He can-not file their ITR us 44AD due to the turnover limit. Hence, there is a requirement of audit us 44AB(b) instead of 44AB(e).
20. Note:
- In above practical scenario from 1 to 7, non-specified profession can opt the 44AD. If he declares the minimum profit u/s 44AD then will be no requirement of audit.
- In above practical scenario from 1 to 7, non-specified profession can opt the 44AD but if he declares the profit less than 6%/8% in subsequent years & total income exceeds the basic exemption limit then will be a requirement of audit us 44AB(e) instead of 44AB(b).
- In above practical scenario from 1 to 7, non-specified profession does not wants to opt the 44AD. If total receipts does not exceed the 50,00,000 then there will be no requirement of audit.
- In above practical scenario from 1 to 7, non-specified profession does not wants to opt the 44AD. If total receipts exceeds the 50,00,000 then there will be a requirement of audit us 44AB(b).
21. Bare Act of Sec 44AB:
Every person,
(a) carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds one crore rupees in any previous year :
Provided that in the case of a person whose—
(a) aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed five per cent of the said amount; and
(b) aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed five per cent of the said payment,
this clause shall have effect as if for the words “one crore rupees”, the words “ten crore rupees” had been substituted:
Provided further that 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; or
(b) carrying on profession shall, if his gross receipts in profession exceed fifty lakh rupees in any previous year; or
(c) carrying on the business shall, if the profits and gains from the business are deemed to be the profits and gains of such person under section 44AE or section 44BB or section 44BBB, as the case may be, and he has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, in any previous year; or
(d) carrying on the profession shall, if the profits and gains from the profession are deemed to be the profits and gains of such person under section 44ADA and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his profession and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year; or
(e) carrying on the business shall, if the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,
get his accounts of such previous year audited by an accountant before the specified date and furnish by that date the report of such audit in the prescribed form duly signed and verified by such accountant.
22. Technical comparison chart for non-specified profession for tax audit clause:
| S No | Nature of Assessee | Applicability of 44AD | Applicability of tax audit clause |
| 1 | Individual who is a resident | Yes | 44AB(b) or 44AB(e) |
| 2 | HUF who is a resident | Yes | 44AB(b) or 44AB(e) |
| 3 | Partnership firm who is a resident | Yes | 44AB(b) or 44AB(e) |
| 4 | LLP who is a resident | No | 44AB(b) |
| 5 | Company who is a resident | No | 44AB(b) |
| 6 | Society who is a resident | No | 44AB(b) |
| 7 | Trust who is a resident | No | 44AB(b) |
| 8 | Individual who is a non resident | No | 44AB(b) |
| 9 | HUF who is a non resident | No | 44AB(b) |
| 10 | Partnership firm who is a non resident | No | 44AB(b) |
| 11 | LLP who is a non resident | No | 44AB(b) |
| 12 | Company who is a non resident | No | 44AB(b) |
| 13 | Society who is a non resident | No | 44AB(b) |
| 14 | Trust who is a non resident | No | 44AB(b) |
| 15 | Others | No | 44AB(b) |
23. Refer article for Tax Audit of Doctors, Lawyers, CAs & Other Professionals – Section 44ADA
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Disclaimer: The views and opinions expressed in this article are those of the author. This article is intended for general information purposes only and does not constitute professional advice. Readers are strongly advised to consult a qualified professional for guidance specific to their individual situation before making any financial, legal, or tax-related decisions. The author shall not be held liable for any loss or damage of any kind incurred as a result of the use of this information or for any actions taken based on the content of this article.
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Hi Naveen,
As per Sec 63, if your sales is upto 10 crore & total receipts and payment in cash is upto 5%. then tax audit will not be applicable.
But as per Sec 62, you need to maintain the books of accounts.
Us 63, it is an exemption from tax audit, not an exemption from books of accounts. You need to maintain the books of accounts.
If you opted presumptive scheme, then there is no requirement of books.
Thank you sir, think and correct me
TAX ACT 2025 effective from 01.04.26
Business (partnership) and LLP Provisions,
Presumptive scheme (Section 63): Businesses with turnover under Rs. 10 crore and cash receipts below 5% are exempt from
maintaining books and undergoing tax