A trader's turnover for P.Y. 2025-26 is Rs 8 crore. Cash receipts are 3 per cent of total receipts and cash payments are 4 per cent of total payments. Tax audit under section 44AB is:

1. The basic audit threshold for business is turnover exceeding Rs 1 crore. 2. Where aggregate cash receipts AND aggregate cash payments each do not exceed 5% of total receipts and payments respectively, the threshold is raised to Rs 10 crore. 3. Here both tests are met (3% and 4%), so the applicable threshold is Rs 10 crore and turnover of Rs 8 crore requires no audit. 4. Receipts or payments by cheque or draft other than account payee are DEEMED cash for these 5% tests — a routinely missed refinement. 5. Option A applies the unenhanced limit; option C invents a Rs 2 crore business threshold (that figure belongs to section 44AD eligibility); option D ties the exemption to presumptive taxation, which is a separate route. _Source: ICAI CA Inter P3(A) Income-tax SM (May 2026), Ch 3 Unit 3 PGBP, PDF p. 112_