Maintenance of
Books of Accounts
Who is required to maintain Books of Accounts?
(Section 44AA of The
Income Tax Act & Rule 6F of Income Tax Rules)
Its mandatory for certain professions to maintain
books of
accounts as per Income Tax Act & Rules. Certain businesses are also
required to maintain books of accounts. Lets find out who is required
to maintain books of accounts under Income Tax Laws.
CASE-1
People carrying on
following professions are compulsorily required to Maintain Books of
Accounts:
- Legal
- Medical
- Engineering
- Architectural
- Accountancy
- Technical Consultancy
- Interior Decoration
- Any other profession as notified by CBDT.
- Rule 6F also specifies Film Artist & Authorised Representatives along with above seven specified professions.
Such Books of accounts should be maintained that enable the Assessing
Officer to compute the total income of the profession as per provisions
of Income Tax Act.
Prescribed books & documents as per Rule 6F are Cash Book, Journal,
Ledger & copies/originals of Bills & receipts. As per the same
rule these books are required to be maintained only if gross receipts of the
profession during any one of the previous three years are more then Rs.
150000.
Read in detail about Rule 6F and the prescribed books & documents....
CASE-2
Maintenance of Books of Accounts on the
basis of total Income
Above
are the specified professions falling in the category of compulsory
maintenance of books. Second category applies to all businesses &
professions.
For
Individuals & HUFs it is compulsory to maintain books
of accounts-
If in any one of the prceeding three years
- Income from business or profession exceeds Rs.
2,50,000 or
- Total Sales/turnover of business or gross receipts of
profession exceeds Rs. 25 lacs.
In case of
newly set up business or profession if income/gross
receipts/total turnover are likely to exceed the specified limit of Rs.
250000/ Rs. 25 lacs as the case may be, books of accounts should be
maintained.
For
all the Assessees other than Individuals
& HUFs it is compulsory to maintain books of accounts-
If in any one of the prceeding three years
- Income from business or profession exceeds Rs.
1,20,000 or
- Total Sales/turnover of business or gross receipts of
profession exceeds Rs. 10 lacs.
In case of
newly set up business or profession
if income/gross receipts/total turnover are likely to exceed the
specified limit of Rs. 120000/ Rs. 10 lacs as the case may be, books of
accounts should be maintained.
CASE-3
For
business falling under
- Section 44AE-Business plying,hiring or leasing goods
carriages,
- Section 44BB-Business of exploration of mineral oils
and
- Section 44BBB-Foreign Companies engaged in certain
specified projects,
- If income to be declared is lower then as specified
in
the deeming section, books of accounts should be maintained.
CASE-4
For
Presumptive Income Cases of Section
44AD-
- When income of the business is to be declared at
a lower rate than the prescribed limit of 8%
or 6% of Section
44AD and
- if such income is
within taxable range ie. exceeds the maximum amount not chargeable to
tax,
- such books of accounts should be maintained that
enable assessing officer to compute total income of the business.
Read
in detail about Presumptive Scheme of Section 44AD
Prescribed Books of Accounts & Documents
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