Find
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.
ITR
Opting out of Sec 44AD and the five-year lock-in
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Provisions
Sec 44AD(4), Income-tax Act 1961 (now Sec 58, Income-tax Act 2025); Sec 44AB(e), Income-tax Act 1961 (now Sec 63, Income-tax Act 2025); Sec 44AD, Income-tax Act 1961 (now Sec 58, Income-tax Act 2025)
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.
Close
- Check the years you used Sec 44AD
- Compute income on books
- Check whether audit is triggered
- Decide with your CA before filing
- File ITR-3 with the right details
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