Analysis of Tax Audit Applicability for Specified and Non-Specified profession

CA Ashish Singla 04 May 2026 120 Views 0 comment Print Income Tax | Articles, Featured

Summary: The notification and analysis clarify the applicability of presumptive taxation and tax audit provisions for professionals under Sections 44ADA, 44AD, and 44AB of the Income Tax framework. Section 44ADA applies only to specified professions listed under Section 44AA (such as legal, medical, engineering, and accountancy), and is available exclusively to resident individuals and partnership firms with gross receipts up to ₹50 lakh (extendable to ₹75 lakh subject to cash limits), requiring a minimum profit declaration of 50%. If profits fall below this threshold and income exceeds the basic exemption limit, tax audit becomes mandatory under Section 44AB(d). Non-specified professionals cannot opt for 44ADA but may use Section 44AD, subject to eligibility and turnover conditions. The rules also outline when audit is triggered based on turnover, profit percentage, and prior presumptive scheme usage. Overall, the framework emphasizes strict classification of professions, clear eligibility conditions, and defined audit triggers to ensure compliance.

1. Coverage of this article:

a. In this article, I am discussing the applicability of Section 44ADA to various types of professions whether or not they are covered u/s 44AA.

b. I will also cover the applicability of tax audit cases where the assessee is covered u/s 44ADA or 44AD.

c. I have covered the applicability of tax audit in case of specified profession as well as non-specified profession.

2. Section 44DA applicability:

It is applicable on specified profession which is covered u/s 44AA (1). All types of professionals or consultants are not eligible to opt the Section 44ADA.

3. List of specified professionals:

a. Legal services (Advocate)

b. Engineer

c. Interior decoration

d. Medical profession (Doctor)

e. Profession of accountancy (Chartered Accountant)

f. Company Secretary

g. Architecture

h. Information technology

i. Technical consultancy

j. Cost Management accountant

k. Other specified profession i.e. film artists

Only above-mentioned professions are eligible to opt 44ADA.

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 not eligible to opt the Section 44ADA because they are not covered in specified profession. They can opt the Section 44AD

5. Eligible assessee u/s 44ADA:

S No	Nature of Assessee	Applicability of 44ADA
1	Individual who is a resident	Yes
2	HUF who is a resident	No
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 & partnership firm, who is a resident, are eligible person who can go for 44ADA. The other types of categories are not eligible to take the benefit of this presumptive taxation scheme us 44ADA as well as us 44AD.

6. Threshold limit for Section 44ADA:

a. If total gross receipts of specified professions does not exceed 50,00,000 then eligible assessee can opt this section.

b. There is no such restriction whether you have received the money in cash or not.

c. Minimum 50% profit should be declared.

7. Minimum profit to be declared:

Under this section, minimum profit should be equal to 50% of total gross receipts. If this condition is not fulfilled by the person, then audit will be mandatory us 44AB(d) if total income exceeds the basic exemption limit.

Bare Act of Sec 44ADA:

(4) Notwithstanding anything contained in the foregoing provisions of this section, an assessee who claims that his profits and gains from the profession are lower than the profits and gains specified in sub-section (1) 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 (1) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.

8. Enhancement of limit:

a. Assessee is also eligible to opt this section when his gross receipts does not exceed 75,00,000 provided that amount received in cash during the year does not exceeds the 5% of total amount received during the year.

b. This restriction is applicable when gross receipts exceed the limit of 50,00,000 but does not exceeds the limit of 75,00,000.

c. There is no condition for payment. It means you can pay the expenses in cash or via bank.

9. Optional or mandatory:

Section 44ADA is mandatory for above mentioned professional. If you are not declaring the income as per this section then audit will be mandatory us 44AB(b) or 44AB(d).

10. 44AD & 44ADA for specified professions:

S No	Nature of Assessee	Applicability of 44ADA	Applicability of 44AD
1	Individual who is a resident	Yes	No
2	HUF who is a resident	No	No
3	Partnership firm who is a resident	Yes	No
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 specified profession which is covered u/s 44AA & they are not eligible assessee in such cases they also can not 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

a. Other professionals or consultants which is not covered u/s 44AA can opt the Section 44AD.

12. Practical scenario 1: