Answer

ITR

Turnover limit for presumptive business income

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  1. Facts

    Sec 44AD applies where turnover is up to ₹2 crore, raised to ₹3 crore if cash receipts are not more than 5% of total receipts. Above these limits, presumptive income under 44AD is not available.

  2. Provisions and law

    • Sec 44AD (now Sec 58)Presumptive business income at 6% of digital and 8% of other receipts for eligible businesses
    • Sec 44AB (now Sec 63)Tax audit when turnover exceeds limits

  3. Analysis

    With ₹2.6 crore turnover, you qualify only if cash receipts were ₹13 lakh or less (5%). If 90% of sales came through UPI and bank, you are within the ₹3 crore limit and can declare at least 6% on digital and 8% on cash receipts. If cash was higher, you need regular books, ITR-3 and possibly tax audit. Check this with the bank statements before choosing.

  4. Conclusion

    1. Total the year's receipts from all modes
    2. Work out cash receipts as a share of total
    3. Apply the ₹2 crore or ₹3 crore limit
    4. If over the limit, move to books and ITR-3

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Presumptive income tax return, ITR-4 (Sugam), Sec 58 (old 44AD, 44ADA, 44AE)

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