Section 44AAof Income tax Act,1961- Maintenance of accounts by certain persons carrying on profession or business

1. Section 44AA prescribes two categories of books of accounts and other documents:-

  •   Category A: Such books of accounts as may enable the Assessing Officer to compute total income in accordance with the provisions of Income Tax Act, 1961.
  •   Category B: Books prescribed under Rule 6f

2. Definitions

  • Notified Profession: legal, medical, engineering or architectural or accountancy or authorized representative or technical consultancy or interior decoration, film artist, Company Secretary, Information Technology or other notified.
  • Authorized representative means a person who represents any other person, on payment of any fee or remuneration before any Tribunal or authority constituted or appointed by or under any law for the time being in force, but does not include an employee of the person so represented or a person carrying on legal profession or a person carrying on the profession of accountancy
  • Film artist includes an actor, cameraman, director, music director, art director, dance director including their assistant, editor, singer, lyricist, story-writer, screen-play writer, dialogue writer and dress designer.

Category A

1. Following person shall maintain Category A books:-

  • Notified Profession;
  • Business or Profession (Other than notified) in which:
    • Income exceed 120,000 rupees Or, [For Individual and HUF limit is 250,000]
    • Sales/Turnover/Gross Receipt exceed 10 lakh rupees [ For Individual and HUF limit is 25 lakhs]

– in any ONE of THREE immediately preceding years; Or

  • Newly Setup Business or Profession (Other than notified) in which:
    • Income likely to exceed 120,000 rupees Or,  [For Individual and HUF limit is 250,000]
    • Sales/Turnover/Gross Receipt likely to exceed 10 lakh rupees; Or [ For Individual and HUF limit is 25 lakhs]
  • Assessee covered under Presumptive Taxation u/s 44AE/44BB/44BBB and claimed his income to be lower under normal provision of income tax act than the income deemed under Presumptive Tax; Or
  • Assessee covered under Presumptive Taxation u/s 44AD and claimed his income to be lower under normal provision of income tax act than the income deemed under Presumptive Tax provided income exceeds the maximum amount which is not chargeable to income-tax in any previous year.

Category B

1. Following person shall maintain Category B books (Rule 6f) if:-

  • Notified Profession:  Gross Receipts exceeds 150,000 in ALL the THREE immediately preceding years
  • Newly Setup notified profession: Gross Receipts likely to exceeds 150,000 in the previous year.

2. The books of account and other documents prescribed in Rule 6f are as follows:-

  • Cash Book, Journal and Ledgers;
  • Carbon copy of Bills issued in excess of 25 rupees;
  • Original bill for expenditure incurred in excess of 50 rupees;

3. Medical professional: In addition to point 2 above should maintain:

  • Daily case register in Form 3C ;
  • An inventory (Opening and closing) of drugs, consumables etc.

4. Place of Maintenance: Applicable books or documents shall be kept and maintained at the place of carrying of profession. (Principal place in case of multiple location)

5. Period of Maintenance: Applicable books or documents shall be kept and maintained for 6 years from the end of relevant AY.

6. Assessment reopened u/s 147: All the books of account and other documents which were kept and maintained at the time of reopening of the assessment shall continue to be so kept and maintained till the assessment so reopened has been completed.]

(Author can be reached at [email protected])

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