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Presumptive Taxation Applicability Checklist — Section 44AD / 44ADA / 44AE

Test eligibility for the presumptive taxation schemes under Section 44AD (business), 44ADA (profession) and 44AE (goods carriages) — cash-receipts ratio computed for you, the current-year threshold comparison left as a documented conclusion.

Free · CORAA original — SA-aligned
Updated 28 Jul 2026
Schemes tested
Sec 44AD (business) · 44ADA (profession) · 44AE (goods carriages)
Cash-ratio test
Determines which turnover/receipts limit applies
Presumptive rate
8%/6% of turnover (44AD) · 50% of receipts (44ADA)
Opting out
May bar re-entry to the scheme for subsequent years
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PRESUMPTIVE TAXATION APPLICABILITY CHECKLIST — SECTION 44AD / 44ADA / 44AE

Entity: ___ · PAN: ___ · Previous year ended: ___ · Assessment Year: ___

A. Cash-receipts ratio (determines the applicable turnover/receipts threshold)

A cash-receipts ratio at or below the threshold specified in the relevant sub-section (verify the current percentage — historically 5% of total receipts) allows the higher turnover/receipts limit for Section 44AD/44AE eligibility; above it, the lower limit applies. Verify the exact current-year percentage and rupee thresholds before concluding.

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This template follows the format published by the Institute of Chartered Accountants of India (ICAI) in the AASB Audit Working Paper Templates (June 2023), the authoritative reference for Indian statutory-audit documentation. Fill in your firm’s letterhead and the engagement details on the form above, click Download Word file, and you’ll get a fully formatted .docx ready to use.

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Common questions

FAQs.

Why does the cash-receipts percentage matter for presumptive taxation eligibility?
Sections 44AD and 44AE offer a higher turnover/receipts threshold for eligibility when cash receipts and cash payments each stay within a specified percentage of the total (the same concept used for the Section 44AB tax-audit threshold) — a business with receipts mostly in cash is tested against the lower threshold, while a predominantly digital/banking-channel business gets the higher one.
What income percentage must be declared under Section 44AD?
A minimum of 8% of turnover must be declared as presumptive income, reduced to 6% for the portion of turnover received through banking channels/digital modes (account payee cheque, bank draft, ECS, or other prescribed electronic modes) — the assessee can declare a higher percentage voluntarily if actual profit is higher, but not lower than these floors without maintaining books and undergoing a regular assessment.
What happens if an assessee opts out of Section 44AD after using it?
If an eligible assessee declares income under Section 44AD in a previous year and then does not declare income in accordance with that section for any of the five subsequent assessment years, they become ineligible to claim the benefit of Section 44AD for the five assessment years succeeding the year in which income was not declared under it, and must maintain regular books and obtain a tax audit if income exceeds the basic exemption limit during that ineligibility period.
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