1. Home
2. Income Tax
3. News and Update

Maintenance of Accounts under Income Tax Act

 

Maintenance of Books of Accounts

Section 44AA of Income Tax Act and rule 6F of Income Tax rules deal with the provisions regarding maintenance of books of accounts under Income tax Act. Following is the type of assessee to whom regular books of account require to be maintained as per rule 6F.

Type of Assessee	If you satisfy the following condition then you need to maintain books of account as per Rule 6F.
Specified Assessee  Specified Professions : Medical, Legal, Accountancy, Film Artist, Engineering, CS, Interior decorator	If gross receipt is more than Rs. 1,50,000 in any of the 3 immediately preceding years. For newly set-up professional if gross receipt is more than Rs. 1,50,000 in the year of set up
Individual & HUF	If profit and gain from business & professional PGBP is more than Rs. 2,50,000. or Total Sale or Gross Receipt is more than Rs. 25,00,000. In any of the 3 years preceding the PY or likely to exceeding in case of newly setup business/ profession.
Other Assessee	If profit and gain from business & professional PGBP is more than Rs. 1,20,000. or Total Sale or Gross Receipt is more than Rs. 10,00,000. In any of the 3 years preceding the PY or likely to exceed in case of newly setup business/ profession.

Books of accounts as per Rule 6F

As per Rule 6F(2) the following books of accounts and documents are required to be maintained:

(1) Cash book

(2) Journal book

(3) Ledger

(4) Carbon copies of bills and carbon copies or counterfoils of receipts issued in respect of sums exceeding Rs 25,

(5) Original bills for expenses exceeding Rs. 50 and payment vouchers for petty expenses.

(6) Stock of drugs, medicines and other consumables accessories used for the purpose of the profession. (In case of Persons engaged in medical profession)

What if failure to maintain books of accounts

 

Failure to maintain books of accounts and other documents or to retain them as required u/s 44AA attracts a penalty of Rs. 25000 under section 271A of Income tax act. 

How many years books of accounts are required to be preserved

 

Assessee is required to maintain any books of accounts for a period of 6 Years from the end of R.A.Y. unless assessment has been opened u/s 147 in which case the same is to be maintained till its Completion. For example: For assessment year 2020-21 one should keep books of accounts upto the assessment year 2014-15 i.e. books of accounts of financial year 2013-14.