Trading turnover of ₹1.6 crore with 95% digital receipts. Do I need a tax audit, or can I use presumptive taxation?

Audit: section 44AB applies at ₹1 crore of turnover, but the limit becomes ₹10 crore when cash receipts and cash payments are each 5% or less of total receipts and payments. At 95% digital you qualify, so no audit at ₹1.6 crore. Watch the 5%: bearer cheques and cheques not crossed account-payee count as cash.

Presumptive: section 44AD lets a resident individual, HUF or partnership with turnover up to ₹2 crore (₹3 crore when cash receipts are within 5%) declare 6% of digital receipts and 8% of cash receipts as income, with no books or audit. On ₹1.6 crore that is about ₹9.6 lakh of deemed income. Your actual profit is roughly ₹14.4 lakh, so 44AD would save tax on nearly ₹5 lakh; that is legal, because the section deems the income irrespective of actual profit. The catch is the five-year rule: once you opt in and later declare lower than 6% or opt out, you are barred from 44AD for five years and must keep books and be audited if your income exceeds the basic exemption.

Under 44AD, advance tax is one instalment, 100% by 15 March, and you file ITR-4.