Maintenance of Books of Accounts – Individuals

Individuals generally have this conception that when the provisions of getting books audited u /s 44AB are attracted then they are required to maintain books of accounts. So it becomes very important to make it clear that provisions of maintaining books of accounts are governed under section 44AA of the Income Tax Act and it is not to be read with Section 44AB.

The provisions of section 44AA have been segregated between specified professionals and person engaged in other professions or business.

For specified professionals:

Section 44AA read with Rule 6F says, all persons engaged in any of the following professions are required to maintain books of accounts and other documents under the prescribed rule, if his annual gross receipts from the profession exceeded Rs.150000 in each of the three years preceeding the financial year. If the gross receipts do not exceed the monetary limit in any of the said three years, then such books are to be maintained as may enable the assessing officer to compute his total income. It should be noted that the income of current year is not to be considered for determining the threshold limit. The following professions are covered under this provision:

6)Technical Consultancy
7)Interior Decoration
8)Authorized Representative
9)Film Artist
10)Any other profession as is notified by the board

For persons other than those covered above:

If either the income from business or profession exceeds Rs.120000 or the turnover or gross receipts exceed Rs.10Lacs in any one of the three years immediately preceeding the previous year then such books are to be maintained as may enable the assessing officer to compute his total income. If the turnover or gross receipts does not exceed the above limit in all the three years then no books are to be maintained.

The books of accounts and documents that are to be maintained includes cash book, journal, ledger, carbon copies of all bills, receipts issued and original bills for expenses exceeding Rs.50.

Points to be noted:

  • Persons engaged in medical profession are also required to maintain daily case register (Form No. 3C) and inventory, as at the beginning and end of the year, of stock of drugs, medicines and other consumables accessories used for the purpose of the profession.
  • Moreover books of accounts are required to be preserved for at least six years as per the Income Tax Act. The books should be kept at the principal place of business or profession. will assist you in all Business Maintenance issues including maintenance of books by specified and non specified professionals and other individuals, audit requirements, ROC Compliances and others.

Leave a Reply

Your email address will not be published.