Question 1

What is Section 44AD presumptive taxation for businesses?

Accepted Answer

Section 44AD allows eligible small businesses, retailers, traders, and contractors with turnover up to ₹2 Crores (₹3 Crores if cash receipts ≤5%) to declare deemed profit of 6% on digital turnover and 8% on cash turnover, exempting them from maintaining accounting books or undergoing tax audits.

Question 2

What are the turnover limits for Section 44AD in FY 2026-27?

Accepted Answer

The threshold limit is ₹2 Crores. Under the Finance Act amendment, the limit is enhanced to ₹3 Crores if aggregate cash receipts during the financial year do not exceed 5% of total turnover.

Question 3

How much tax do small shopkeepers and traders pay under Section 44AD?

Accepted Answer

Tax is paid at the applicable individual slab rates on the deemed profit (6% or 8%). Under the New Tax Regime for FY 2026-27, if total deemed profit is up to ₹12 Lakhs (with Section 87A rebate and marginal relief), the effective tax is zero.

Question 4

When is advance tax paid under Section 44AD?

Accepted Answer

Unlike regular taxpayers who pay 4 quarterly installments, Section 44AD taxpayers pay 100% of their advance tax in a single installment on or before 15th March of the financial year.