Section 44AD presumptive taxation: who should use it and who shouldn't

The scheme in brief

Eligible businesses with turnover up to the prescribed limit can declare profits at 8% of turnover (6% for digital receipts) and skip detailed books.

Who benefits

• Traders and small businesses with thin compliance bandwidth
• Businesses whose actual margins exceed the deemed rate

The trap to avoid

If you opt out of 44AD after using it, you cannot return for five assessment years, and tax audit may apply. The decision deserves a forward look at expected margins, not just this year's convenience.

Documentation still matters

Presumptive does not mean paperless: keep bank statements, turnover proofs and receipts mapping, because assessments still ask where the deposits came from.