Section 44AA of The Income Tax Act, 1961 ''COMPULSORY MAINTAIN OF BOOKS ACCOUNTS''

👉Are you a Businessman or a Professional? 

👉Are you confuse, whether you are compulsory required to maintain Books of Accounts or not? 

👉What is the Limit for maintaining The Books of Accounts?

Then you are at right place. I am going to help you in finding all the answer😇

Provision of Section 44AA of The Income Tax Act, 1961 deals with the ''COMPULSORY MAINTAIN OF BOOKS ACCOUNTS''. For easy understanding we can divide this section into two parts, i.e. for ''Professionals'' and for ''Businessman''.

🤔 When Professionals are required for compulsory maintain their books of accounts?

Section 44AA says that, when the Gross Receipt of ''Specified Profession'' is more than Rs. 1,50,000 (One Lakh Fifty Thousand) in all 3 years preceding the previous year or likely to exceed if the profession is newly setup than assessee is required to maintain books of accounts as per Rule 6F, otherwise he is required to maintain such books of accounts or documents from which Assessing Officer is able to complete the assessment.

In other words, if you are a specified professional and your gross receipt is more than Rs. 1,50,000 in all 3 year preceding the previous year than you are compulsorily required to maintain books of accounts as per Rule 6F.

🙋Now Lets understand the meaning of  ''Specified professions''.

For the purpose of section 44AA and Rule 6F legal, ‘specified professions’  includes-

• Medical
• Legal
• Accountancy
• Film Artist
• Engineering 
• Technical Consultancy
• Architectural
• Interior Decorator
• Company Secretary
• Any other profession which may notified by CBDT (Central Board of Direct Taxes).

The prescribed Books Of Account and other documents under Rule 6F are as follows:

• Cash Book
• Journal
• Ledgers
• Carbon copies of bill exceeding Rs. 25/-
• Original bill for expenditure exceeding Rs. 50/- 

Further in case of medical Practitioner additional books to be maintain is daily case register and medical inventory register.

🤔 When Business owners are required to compulsory maintain their books of accounts?

Under this all other non specified assessee and Businesses are covered. In case where Income from Business or Profession is more than Rs.1,20,000/- or Gross Receipt is more than Rs.10,00,000/- in any of the 3 years preceding the previous year or likely to exceeding in case of newly setup business/ profession than assessee is required to maintain books of accounts or documents from which Assessing Officer is able to complete the assessment otherwise the assessee is not required to maintain any books of accounts.

However, in the case of Individuals and Hindu Undivided Family (HUF) carrying on business or profession, the monetary limits of income and total sales or turn over or gross receipts, etc. specified above for maintenance of books of accounts has been increased from Rs.1,20,000 to Rs.2,50,000 and from Rs.10,00,000 to Rs.25,00,000, respectively.

😩Note: As per Section 271A, If any assessee is fail to comply with the provision of section 44AA then penalty of Rs. 25,000 may attract.

Disclaimer: The contents of this article are for information purposes only and does not constitute advice or legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of the statute, latest judicial pronouncements, circulars, clarifications, etc. before acting based on the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that the Author is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors, or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.