Answer

1. F

   Facts

   Yes, but under Sec 44AD(4) (now within Sec 58) a person who opts out after using the scheme cannot use it again for the next five years. If income is then below the presumptive rate and above the basic exemption, a tax audit is required.

2. P

   Provisions and law

   • Sec 44AD(4), Income-tax Act 1961 (now Sec 58, Income-tax Act 2025)A person who opts out of Sec 44AD cannot use it for the next five years
   • Sec 44AB(e), Income-tax Act 1961 (now Sec 63, Income-tax Act 2025)Tax audit where income is shown below the presumptive rate after the Sec 44AD(4) lock-in applies and income exceeds the basic exemption
   • Sec 44AD, Income-tax Act 1961 (now Sec 58, Income-tax Act 2025)Presumptive business income at 6% of digital or 8% of other turnover, up to ₹2 crore (₹3 crore if cash receipts are within 5%)
3. A

   Analysis

   Example: a trader declared 6% under Sec 44AD in FY 2024-25 and has a ₹1 lakh loss in FY 2025-26. Opting out means ITR-3 with books, and since income is below 6% the audit question arises; if total income is below the exemption limit, audit under Sec 44AB(e) may not apply. Plan before switching.

4. C

   Conclusion

   1. 1Check the years you used Sec 44AD
   2. 2Compute income on books
   3. 3Check whether audit is triggered
   4. 4Decide with your CA before filing
   5. 5File ITR-3 with the right details

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