Who all are liable to maintain Books of Account as per Income Tax?

Section 44AA deals with provision relating to persons who all are liable to maintain Books of Account as per Income Tax. Businesses and professions are required to maintain the books of accounts for income tax purpose. The detailed requirements of different transactions are prescribed under section 44AA. This article will explain provision related to Compulsory maintenance of books of accounts under Section 44AA of Income Tax Act, 1961. In this article we will learn about provisions of section 44AA.

Who are Required to Maintain Books of Account as per section 44AA?

As per Section 44AA and Rule 6F, persons involved in the following professions are mandated to maintain books of account:

• Legal
• Medical
• Engineering
• Architectural
• Interior decoration
• Accountancy
• Technical consultancy
• Film artists (anyone engaged as a professional in the film industry)

 In addition to this, the following persons also have to maintain account books:

• Persons involved in specified as well as non-specified professions, and in business;
• Anyone involved in other profession/business, who earns more than Rs. 1.2 lakh;
• The total turnover/gross receipts of business/profession are more than Rs. 10 lakh in any of the previous 3 years;
• Any individual covered under Section 44AD, 44AE or 44AF, who has declared less income than the profits estimated under these sections;
• Even if the business is new, if it is expected to earn more than Rs. 1.2 lakh or if its sales is expected to cross Rs. 10 lakh, then account books need to be maintained.

However, the above-listed individuals are not required to maintain account books if the business turnover in any of the previous years is less than Rs. 1.5 lakh or if the new business is not expected to cross gross receipts of Rs. 1.5 lakh.

The Central Board of Direct Taxes is free to add professions to this list.

When are not required to maintain books of accounts?

Accounts are not required to be maintained under the following conditions:

• Businesses and professions covered under Section 44AD and Section 44AE: Businesses and professions under these sections do not have to maintain books of accounts. The exception to this is if taxpayers claim that their business income is lesser than the presumed income under the sections 44AD and 44AE. Such taxpayers must maintain their book of accounts. This will enable the Assessing Officer to calculate their accurate taxable income under the Income Tax Act. However, specific records have not been prescribed.
• Income Less than Rs. 1.20 lakhs and Turnover less than Rs. 10 lakhss: If income is less than Rs.1.20 lakh or the total sales/gross receipts or turnover do not exceed Rs.10 lakh in the preceding 3 years Businesses and professions that fall into this category do not have to maintain books of accounts. For newly established businesses or professions with income less than Rs.1.20 lakh/total sales/gross receipts or turnover not more than Rs.10 lakh in the preceding 3 years: Books of accounts need not be maintained for such businesses or professions.

What are the books to be maintained as per rule 6f of section 44AA?

The books of account and other documents prescribed in Rule 6f of Section 44AA are as follows: –

• Cash Book, Journal and Ledgers;
• Carbon copy of Bills issued in excess of 25 rupees;
• Original bill for expenditure incurred in excess of 50 rupees;
• Medical professional should maintain Daily case register in Form 3C
• An inventory (Opening and closing) of drugs, consumables etc.

What is the period for which books is required to be maintained and Place of Maintenance of books?

Applicable books or documents shall be kept and maintained at the place of carrying of profession. (Principal place in case of multiple location). The assessee is required to kept and maintain books or documents shall be for 6 years from the end of relevant Assessment Year.

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