30 March 2009
Hi I wanted to know when does a professional needs to maintain books of accounts as per income tax rules. also tell me the section. this is urget reply soon. thanks
30 March 2009
Are professionals required to maintain any books of account under the Income tax Act?
Yes. The following books and documents are to be maintained mandatory:
1. Cash book 2. Journal in case of mercantile system of accounting 3. Ledger 4. Carbon copies or counter foils of all bills issued, being serially numbered 5. Original copies of all expenditure bills. Signed vouchers where bills not available for less than Rs.50.
An employee needs not maintain books of account. On the other hand, a consultant needs to maintain books of accounts if her/his turnover exceeds the limits specified in the Income Tax Act (normally Rs 1,20,000) in one financial year. S/he has to maintain her/his books of accounts for a period of 8 years and produce them before the Income Tax authorities, if called for. If her/his professional income exceeds Rs 10 lakhs, her/his accounts need to be audited and a tax audit report needs to be filed along with his return of income.
30 March 2009
As per Section 44AA of the Income-Tax (IT) Act, 1961, if the income from business exceeds Rs 1.2 lakh or the total sales or turnover or gross receipt is in excess of Rs 10 lakh in any of the three years immediately preceding the previous year, then the person carrying the business is required to maintain books of accounts and other documents as may enable the assessing officer to compute the taxable income under the IT Act. This category also includes an assessee covered under Section 44AD or 44AE or 44AF or 44BB or 44BBB if it is claimed that the profit and gain of the business is lower than the profit and gain computed under these sections on presumptive basis.
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