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If you declare business profit lower than the presumptive rate and your income is above the basic exemption limit, the law expects books of account and a tax audit. Without them, the return can be marked defective.
ITR
Defective notice for low presumptive income without audit
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Provisions
Sec 139(9), Income-tax Act 1961 (now Sec 263(7), Income-tax Act 2025); Sec 44AD, Income-tax Act 1961 (now Sec 58, Income-tax Act 2025); Sec 44AB, Income-tax Act 1961 (now Sec 63, Income-tax Act 2025)
Analysis
Say your turnover was ₹60 lakh, all digital, and you declared ₹2,40,000 profit (4%), with total income above the exemption limit. You have two routes. You can raise profit to at least 6% of ₹60 lakh, that is ₹3,60,000, in the corrected return, or get books audited and support the lower profit. Compare the extra tax under the first route with the audit cost and the risk of questions.
Close
- Work out the presumptive profit at 6% or 8% for your turnover.
- Decide between declaring the presumptive profit or getting an audit.
- If auditing, get the report uploaded first.
- Upload the corrected return with matching figures.
Choosing a lower profit later can also affect your use of presumptive taxation for the next five years.
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