1. BOOKS TO BE MAINTAINED:

 

•  Cash book;

 

• Ledger;

 

• Journal;

 

• Carbon copy of bills and receipts issued by the person in relation to sums exceeding INR 25000;

 

• Original bills and receipts issued by the person in respect of expenditure incurred in relation to sums exceeding INR 50,000.

 

2. Section 44AB: Audit of Accounts WHO HAVE TO MAKE HIS ACCOUNT AUDITED??

 

• Person carrying on business and total sales, turnover or gross receipts has exceeds INR 1 crore in any previous year;

 

• Person carrying on profession and gross receipts has exceeds INR 50 Lakhs in any previous year;
• Where assesse is showing profit under presumptive taxation u/s 44AE, 44BB or 44BBB lower profit  than normal (6% / 8%).

 

• Where assesse is showing profit under section 44ADA and he claims income to be lower than profit and gains prescribed under those section and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year;

 

• Person carrying on business to which provisions of section 44AD (4) are applicable and his income exceeds Rs. 250000 which is not chargeable to income-tax in any previous year.

 

 

 

3.  Section 44ADA – Presumptive Taxation for Professionals

 

• Section 44ADA is applicable to persons engaged in profession referred in section 44AA (1);

 

• Total receipts should not exceed INR 50,00,000 in a previous year; Profits and gains would be sum equal to 50% of total gross receipts or a sum higher than the aforesaid sum claimed to have been earned by the assessee;

 

• All deduction u/s 30 to 38 shall be deemed to have been allowed.

 

• If the assesse claims to have profits and gains from the profession to be lower than the profits and gains specified above and the total income exceeds the maximum amount which is not chargeable to income tax, in such case the assesse is required to get his accounts audited under section 44AB.

 

FAQs on Maintenance of accounts by certain persons carrying on profession or business under Income Tax Act, 1961

 

Q1. Can a person engaged in a profession as prescribed under section 44AA (1) adopt the presumptive taxation scheme of section 44AD?

 

Answer- A person who is engaged in any profession as prescribed under section 44AA(1) cannot adopt the presumptive taxation scheme of section 44AD.

 

However, he can opt for presumptive taxation scheme under section

44ADA and declare 50% of gross receipts of profession as his presumptive income. Presumptive Scheme under section 44ADA is applicable only for resident assesse whose total gross receipts of profession do not exceed fifty lakh rupees.

 

Q2. Do I need to maintain any records or proof of earnings?

 

Answer- For every source of income you have to maintain proof of earning and the records specified under the Income-tax Act. In case no such records are prescribed, you should maintain reasonable records with which you can support the claim of income.

 

Q3. If a person adopts the presumptive taxation scheme of section 44AD, then is he required to maintain books of account as per section 44AA?

 

Answer- Section 44AA deals with provisions relating to maintenance of books of account by a person engaged in business/profession. Thus, a person engaged in business/profession has to maintain books of account of his business/profession according to the provisions of section 44AA.

 

Q4. Where should the books of account of business be kept and for how long?

 

Answer- All the books of account and related documents should be kept at the principal place of business. These documents should be preserved for a minimum of six years from the end of relevant Assessment year i.e. for a total of 7 financial year from the end of relevant year. However, for assessment related queries Higher Years may be required.

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