The ₹1,50,000 specified-profession threshold, the ₹2,50,000/₹25,00,000 individual-HUF limits vs ₹1,20,000/₹10,00,000 for others, the new-business prospective test, Rule 6F prescribed books, and the 44AD/44ADA presumptive exemption — answered for one assessee at a time.
Sec 44AA and Sec 44AB are two separate obligations with two separate limits — an assessee can be required to maintain books under 44AA well below the turnover level that triggers an audit under 44AB, and the “3 preceding years” test in 44AA is frequently tested against only the latest year by mistake.
Sec 44AA(1) covers specified professions — legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, and the professions notified under Rule 6F: authorised representative, film artist, company secretary, and information technology. A specified professional whose gross receipts exceed ₹1,50,000 in ALL of the 3 preceding years (or are likely to exceed ₹1,50,000 in the current year, for a newly set-up profession) must maintain the PRESCRIBED books under Rule 6F. Below that threshold, the prescribed set is not mandatory, but Sec 44AA(1) still requires books sufficient for the Assessing Officer to compute total income — there is no full exemption for a specified profession at any receipt level.
Sec 44AA(2) covers everyone else — other professions and all businesses. Books of account are required if, in ANY of the 3 preceding years (or, for a new business, the current year on a prospective basis), income exceeds ₹2,50,000 OR turnover/gross receipts exceed ₹25,00,000 for an individual or HUF; the limits are lower — ₹1,20,000 and ₹10,00,000 — for every other assessee (firms, companies, AOPs). Either limb alone is enough to trigger the requirement; neither needs both.
Two overrides sit above both tests. First, an assessee who has opted for the presumptive scheme under Sec 44AD (business) or Sec 44ADA (specified professions) and declares income at or above the deemed rate is exempt from Sec 44AA for that business/profession — declaring below the deemed rate withdraws the exemption and also risks a compulsory tax audit under Sec 44AB(e)/(d). Second, the "3 preceding years" language means the test looks at the WORST year of the last three, not just the most recent one — a business that crossed the limit two years ago and has since fallen below it is still caught.
An independent consulting engineer (a specified profession) had gross receipts of ₹1,20,000 in FY 2023-24, ₹1,68,000 in FY 2024-25, and ₹1,55,000 in FY 2025-26. For FY 2026-27, receipts are expected to be similar.
