Under the Income Tax Act, ordinary taxpayers are required to maintain books of accounts and get them audited which has been prescribed. Till now there was no specific provision for books of accounts to be maintained by charitable organisations. Finance act 2022 has now prescribed books of accounts and other documents to be maintained by such organisations if their total income exceeds the maximum amount not chargeable to tax. These books of accounts have been discussed in this article.
The New Rule
The key extracts of the newly notified rule are given below:
Every charitable institution is required to keep and maintain the following books of accounts and other documents:
i) Books of account including the cash book, ledger, journal, copies of bills, original bills, and any other books.
ii) Books of account for a business undertaking and business carried on by assessee
iii) Other documents for maintaining a record of :
Mode in which documents may be kept:-
The books of account and other documents may be kept in written form electronic form digital from or as printouts of data stored digitally
Place where to be kept
The books of account and other documents shall be kept and maintained by the entities at their registered office. However books may be kept in another place if management decides to do so by passing a resolution.
Period for which books to be maintained
The books of account and other documents shall be kept and maintained for 10 years from the end of the relevant assessment year
Hence for FY 2022-2023 all charitable entities would be required to maintain books of account and documents as per details provided in the article above. It is advisable that your charitable organization gets its accounting software modified so that the above rules are complied with. Have you started this process ?
Complete text of the new Rule 17AA can be Books of accounts to be maintained by university, charitable/medical institutions
The author is a practicing Chartered Accountant, Senior Partner in Kohli Chitkara & Co. LLP and can be contacted at firstname.lastname@example.org. Any comments or queries are welcome.
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