Section 44AA & Rule 6F : Books of Accounts for Income Tax

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A. DEFINITIONS

To Understand the provisions relating to compulsory maintenance of books of accounts, it is necessary to know the meaning of two terms –

1.  SPECIFIED PROFESSION

Following professions have been specified for the purpose of Section 44AA –

  • Legal
  • Medical
  • Engineering
  • Architectural
  • Accountancy
  • Technical Consultancy
  • Interior Decoration
  • Authorised Representative
  • Film Artist
  • Information Technology

2. NON – SPECIFIED PROFESSION

A non – specified profession is a profession other than a specified profession.

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B. Requirement of Compulsory maintenance of Books of Accounts

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Cateogary A 1. Person is carrying on Specified Profession.

2. Gross Receipts from such profession does not exceed Rs.1,50,000  during any of the three immediately preceeding previous financial years.

OR

If the business is newly set up in the previous year, Gross Receipts are not likely to exceed Rs.1,50,000 during the year.

Such books of accounts and other documents as would enable the assessing officer to compute their taxable income. No books of accounts have been prescribed for this cateogary.
Cateogary B 1. Person is carrying on Specified Profession.

2. Gross Receipts from such profession exceeds Rs.1,50,000  during all of the three immediately preceeding previous financial years.

OR

If the business is newly set up in the previous year, Gross Receipts are likely to exceed Rs.1,50,000 during the year.

Persons falling under this cateogary shall maintain books of accounts as per Rule 6F.
Cateogary C 1. Person is carrying on ‘Non Specified profession’.

2. Income from business or profession does not exceed Rs.1,20,000  OR Turnover or Gropss Receipts does not exceed Rs.10,00,000. in all the three years immediately preceeding the previous year.

OR

If the business or profession is newly set up in the previous year, gross receipts/turnover / income from business or profession is not likely to exceed the aforesaid amount.

Persons coming under this cateogary are not required to maintain books of accounts
Cateogary D 1. Person is carrying on ‘Non Specified profession’.

2. Income from business or profession exceeds Rs.1,20,000  OR Turnover or Gross Receipts exceeds Rs.10,00,000. in any of the three years immediately preceeding the previous year.

OR

If the business or profession is newly set up in the previous year, gross receipts/turnover / income from business or profession is likely to exceed the aforesaid amount.

3. Assessee is covered under 44AD, 44AE, 44AF, 44BB or 44BBB and claims that profit or gains from business or profession are lower than the profits or gains computed under these sections.

Such books of accounts and other documents as would enable the assessing officer to compute their taxable income. No books of accounts have been prescribed for this cateogary.

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C. Books of Accounts Specified Under Rule 6F

1. Cash Book

2. A Journal in case of mercantile system.

3. A Ledger

4. Carbon copies of bills (whether machine numbered or otherwise serially numbered) exceeding Rs. 25 issued by the person and carbon copies or counterfoils of machine numbered or otherwise serially numbered receipts issued by the person;

5. Original bills/receipts issued to him in respect of expenditure (payment vouchers if bills/receipts are not issued and amount of expenditure does not exceed Rs. 50).

6. Medical professionalsIn addition to above, a person engaged in medical profession (i.e., a practitioner of any system of medicine – physicians, surgeons, dentists, pathologists, radiologists, vaids, hakims, etc.) has to maintain following items:

•(I) A daily case register in prescribed form (i.e. Form 3C), showing date, patient’s name, nature of professional services rendered (i.e., general consultation, surgery, injection, visit, etc.,) fees received and date of receipt; and

•(II) An inventory under broad heads, as on the first and last day of the previous year, of the stock of drugs, medicines and other consumable accessories used for the purpose of his profession.

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D. Place of Maintenance of Books and Accounts

•1. The aforesaid books of account and documents (other than those relating to previous year which has come to an end) should be kept and maintained by the person at the  place where he is carrying on the profession.

2.• Where the profession is carried on in more than one place, the books of account shall be kept at the principal place of his profession.

•3. If the person keeps and maintains separate books of account in respect of each place where the profession is carried out, such books of account and other documents may be kept and maintained at the respective places at which the profession is carried out.

•4. The aforesaid books of account and documents should be kept and maintained for a period of 6 years from the end of the relevant assessment year.

5.• Where the assessment in relation to any assessment year has been reopened under section 147, all the books of account and other documents which were kept and maintained at the time of reopening of the assessment should continue to be so kept and maintained till the assessment so reopened has been completed.

 

 

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