Section 44AA & Rule 6F: Books of Accounts for Income Tax

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Section 44AA prescribes the persons who are mandatorily required to maintain books of Accounts for Income Tax purposes. As per Section 44AA, any person carrying on any of the following professions is required to maintain books of accounts:-

  • Legal
  • Medical
  • Engineering
  • Architectural
  • Accountancy
  • Technical Consultancy
  • Interior Decoration
  • Any other profession that may be notified by CBDT in future

Section 44AA: Books of Accounts to be maintained by persons not covered above

As per Section 44AA, persons carrying on the professions specified above are mandatorily required to maintain their books of accounts. However, the persons who are not covered in the list of professions specified under Section 44 AA which are mentioned above are mandatorily required to maintain their books of accounts only if:-

  • If the Income from Business or Profession exceeds Rs. 1,20,000 or the Total Sales/ Turnover/ Gross Receipts exceeds Rs. 10,00,000 in any of the previous 3 years.
  • If the Business or Profession is newly set-up, it would be required to maintain books of Accounts if the income from business or profession is likely to exceed Rs. 1,20,000 and the Total Sales/ Turnover/ Gross Receipts is likely to exceed Rs. 10,00,000.
  • If the taxpayer is covered under Section 44AD/ Section 44AE/ Section 44AF and the taxpayer has claimed his income in the income tax return to be lower than the profits or gains deemed under Section 44AD/ Section 44AE/ Section 44AF respectively.

Rule 6F: Books of Accounts to be maintained

The category of persons specified above under Section 44AA is mandatorily required to maintain the books of accounts as mentioned below. However, these books are not required to be maintained if the turnover of the business in any of the previous 3 years does not exceed Rs. 1,50,000 or in case the business is newly set-up – it is not expected to exceed Rs. 1,50,000.

The books of accounts to be maintained are as follows:-

  • Cash Book
  • Journal (if the Accounts are maintained according to the Mercantile system of Accounting)
  • Ledger
  • Carbon copies of Bills, whether machine numbered or otherwise serial numbered, wherever such bills are issued by the person, and carbon copies or counterfoils of machine numbered or otherwise serial numbered receipts issued by him. However, this requirement will not apply in relation to sums not exceeding Rs. 25,000.
  • Original Bills wherever issued to the person and receipts in respect of expenditure incurred by the person. In case the bills and receipts are not issued and the expenditure incurred does not exceed Rs. 50,000 – the Payment Vouchers prepared and made by the person shall be kept. However, the requirements as to preparation and signing of the payment vouchers shall not apply in a case where the cash book maintained by the person contains adequate particulars in respect of the expenditure incurred by him.
  • A person carrying on Medical Profession shall in addition to the books of accounts and other documents specified above shall also maintain the following:-
    • A daily case register in Form 3C
    • Inventory Book (under Broad heads) as on the first and last day of the previous year of the stock of drugs, medicines and other consumable accessories used for the purpose of his profession.
  • The Books of Accounts and other documents shall be kept and maintained by the person at the place where he is carrying on the profession or, where the profession is carried on at more than 1 place – the books should be maintained at the principal place of business. However, in case separate books of accounts are maintained in respect of each place where the profession is carried on, the books of accounts may be kept and maintained at the respective place at which the profession is carried on.
  • All the books of Accounts specified above shall be kept and maintained for a period of 6 years from the end of the relevant assessment year.

Other Relevant Points regarding Section 44AA & Rule 6F

  1. Cash Book means a Record of all Cash Receipts and payments, kept and maintained on a day-to-day basis and giving the cash balance in hand at the end of each day or at the end of a specified period not exceeding a month.
  2. Film Artist means any person engaged in his professional capacity  in the production of a cinematographic film whether produced by him or any other person as:-
    1. Actor
    2. Cameraman
    3. Director, including an Assistant Director
    4. Music Director, including an Assistant Music Director
    5. Art Director, including an Assistant Art Director
    6. Dance Director, including an Assistant Dace Director
    7. Editor
    8. Singer
    9. Lyricist
    10. Story Writer
    11. Screen Play Writer
    12. Dialogue Writer
    13. Dress Designer

A Personal Finance enthusiast, Karan is the founder of charteredclub.com and loves to discuss about Money related matters.