Short answer: presumptive taxation is Section 58. Tax audit is Section 63. Business presumptive limit ₹2 crore, rising to ₹3 crore if cash receipts are within 5%; professionals ₹50 lakh rising to ₹75 lakh. Audit at ₹1 crore, rising to ₹10 crore if cash receipts and payments are both within 5%.
First, the two sections people mix up
| Provision | 1961 Act | 2025 Act |
|---|---|---|
| Presumptive taxation | ss.44AD / 44ADA / 44AE | s.58 |
| Books of account | s.44AA | s.62 |
| Tax audit | s.44AB | s.63 |
| Non-resident presumptive regimes | ss.44B / 44BB / 44BBA / 44BBB | s.61 |
Three separate presumptive schemes — small business, specified professions, goods carriage — now sit inside one Section 58. Audit is a different section entirely at 63, and books at 62.
They get conflated because they interact: electing presumptive taxation is one of the main ways to stay out of audit. But they are distinct provisions with distinct thresholds and distinct tests, and a reply to a notice that cites the wrong one starts on the back foot.
The thresholds
Presumptive — Section 58
| Who | Standard limit | Raised limit (cash receipts ≤ 5%) |
|---|---|---|
| Business | ₹2 crore | ₹3 crore |
| Specified professions | ₹50 lakh | ₹75 lakh |
Income is offered at the prescribed percentage of turnover — for a business, 8% generally and 6% on receipts through banking channels; for a specified profession, 50% of gross receipts. Goods-carriage operators compute per vehicle per month.
Tax audit — Section 63
| Who | Standard limit | Raised limit (cash ≤ 5%) |
|---|---|---|
| Business | ₹1 crore | ₹10 crore |
| Professionals | ₹50 lakh | — |
⚠️ The 5% cash test is not one test
Both reliefs use a 5% cash condition, but they do not ask the same question — and the difference is explicit in the Act.
- Presumptive, s.58(2): the raised limit applies "where the amount or aggregate of amounts received, in cash, does not exceed 5% of the total turnover or gross receipts". Receipts only.
- Audit, s.63(1) Table Sl. No. 1(b): the ₹10 crore substitution applies only where cash receipts are within 5% and cash payments are within 5%. Two limbs, joined by "and".
⚠️ A non-account-payee cheque or bank draft counts as cash for both tests — Section 58(9) and Section 63(5)(b) say so in terms. A business paying suppliers by bearer cheque is making cash payments for this purpose, whatever the bank statement looks like.
This asymmetry catches real businesses. A contractor who invoices everything by bank transfer but pays labour, site expenses or small suppliers in cash passes the receipts limb comfortably and fails the payments limb. The ₹10 crore audit relief disappears and the threshold drops back to ₹1 crore.
If you are relying on the ₹10 crore figure, the question to answer is not "how do my customers pay me" — it is "how do I pay everybody else".
Worked examples
A contractor with ₹2.6 crore turnover, all receipts by bank, 3% of payments in cash. Cash receipts are nil, so the presumptive limit is ₹3 crore and turnover is within it — Section 58 is available. Cash payments are 3%, within the audit test too, so the Section 63 threshold is ₹10 crore and no audit is triggered. Presumptive income at 6% of ₹2.6 crore is ₹15.6 lakh. Clean on both counts.
The same contractor, but 9% of payments in cash. Presumptive is still available — the receipts limb is unaffected, so the ₹3 crore limit still applies and Section 58 can be elected. But the audit relief is lost, because payments exceed 5%. The audit threshold reverts to ₹1 crore, and turnover of ₹2.6 crore is well above it.
The practical answer here is usually to elect presumptive under Section 58, which relieves the audit obligation for the income offered under it — but that is a decision with a multi-year commitment attached, not a one-year convenience.
A consultant with ₹68 lakh of receipts, all by bank. Cash receipts are nil, so the professional presumptive limit is ₹75 lakh and Section 58 is available. Income is offered at 50% — ₹34 lakh. Note that the professional audit threshold stays at ₹50 lakh with no cash-based uplift, so absent the presumptive election this consultant would be in audit.
Which professions count. Section 62(4) defines "specified profession" as legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology or company secretary, plus anything the Board notifies. The inclusion of information technology matters locally: an independent IT consultant is on the professional limb — ₹50 lakh / ₹75 lakh at 50% — not the business limb at ₹2 crore / ₹3 crore and 6–8%. Getting that the wrong way round changes both the threshold and the rate.
The commitment nobody reads
Section 58(7) sets it out: where an eligible assessee declares profit under entry 1 of the Table and then, in any of the five tax years succeeding that year, declares profit otherwise than in accordance with it, he is ineligible for Section 58 for five tax years after the year of departure. Section 58(8) adds that where that happens and total income exceeds the maximum not chargeable to tax, he must maintain books under Section 62 and get them audited under Section 63.
Note what it does not cover: Section 58(7) refers only to entry 1 of the Table — the business limb. The professional limb at entry 3 carries no equivalent, which is the statutory basis for the point below.
This matters most for a growing business. Electing in year one because it is simple, then finding in year three that actual margins are below the presumptive rate and wanting out, is exactly the situation the lock-out was designed to prevent. It should be modelled before the first election.
We work through that decision in detail — under the old Act's numbering, but the logic is unchanged — in Section 44AD or regular books? The five-year trap.
Which Act, which year
| Income of | Governed by | Cite |
|---|---|---|
| FY 2025-26 (AY 2026-27) and earlier | Income-tax Act, 1961 | ss.44AD / 44AB |
| Tax year 2026-27 onwards | Income-tax Act, 2025 | ss.58 / 63 |
The audit report form changes with it: 3CA/3CB/3CD for AY 2026-27, due 30 September 2026, and a consolidated Form 26 from tax year 2026-27.
And the audit deadline stops being a fixed date. Under Section 63(5)(a) the "specified date" for getting accounts audited is one month prior to the due date for furnishing the return under Section 263(1) — a moving date tied to your return, rather than the 30 September that applied under the 1961 Act. If the return due date shifts, the audit date shifts with it.
See Income-tax Rules 2026 vs 1962 and tax audit season: due dates and what your auditor needs.
This is a working reference, not the statute. For anything you are filing or relying on, confirm the section text, the rate and the current threshold against the Act or the department's official 1961-vs-2025 comparison utility.