Answer

1. F

   Facts

   A loss alone does not require audit if turnover is within the Sec 44AB limits. Audit is needed if you opted for Sec 44AD in an earlier year, now declare profit below the presumptive rate or a loss, and your total income exceeds the basic exemption limit.

2. P

   Provisions and law

   • Sec 44AB (now Sec 63)Tax audit if business turnover exceeds ₹1 crore, or ₹10 crore where cash receipts and payments are each within 5%
   • Sec 44AD (now Sec 58)Presumptive income; opting out within five years brings books and audit conditions
3. A

   Analysis

   If you never used Sec 44AD and F&O turnover is ₹40 lakh with a loss of ₹3 lakh, you file ITR-3 without audit. If you used 44AD two years ago and now show a loss, and salary makes your total income ₹9 lakh, audit applies. Many traders get audits they do not need, or skip ones they do; check the history first.

4. C

   Conclusion

   1. 1Check whether any return in the last five years used Sec 44AD
   2. 2Compute total income including salary and other heads
   3. 3Decide audit applicability
   4. 4File ITR-3 by the right due date

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.