07 April 2015
one of my friend is a contractor who provide workers to a factory for packing. but he does not maintain any books of accounts. his gross receipts are approx 6 lacs but after paying wages to his workers (10 nos) he left with net income rs 1.60 lacs. Is he liable to maintain the books of accounts?
07 April 2015
Books of account is necessary when the gross receipts exceeds 5 Lacs in case of business. However, you may rely on sec 44 AD of the Income Tax Act (Presumptive Income). It states that the income has to be 8% of the gross receipts (Gross receipts shall not exceed Rs. 1 Crores). Now, your friend wish to disclose Rs. 1.6 Lacs as income (more than 8%), there is no complusion in maintaining books of accounts. He may directly do so. He just needs o maintain records pertaining to his gross receipts only.
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