Home > Income Tax > Business or Profession > Section 44AA – Maintenance of Accounts

Section 44AA – Maintenance of Accounts

U.C Date : 25 Feb 2015

Case – I Persons carrying on specified profession

Specified profession – Profession of legal, medical, engineering, architectural, accounting, technical consultancy, interior decoration, film artist or authorised representative.

Persons carrying on specified profession and his gross receipts exceeds Rs. 1,50,000 in all the three immediately preceding years or in case of a new profession  likely to exceed Rs.1,50,000 in the year of set up are required to maintain specified books of account.

Persons carrying on specified profession and not covered above are required to maintain such books of account and other documents as may enable the assessing officer to compute his taxable income.

Specified books of accounts – Cash book, journal, ledger, carbon copies of bills exceeding Rs. 25,original bills issued to him, payment vouchers

Case – II Other assessee

In the following cases, assessee is required to keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with this Act.

  1. His income from business or profession exceeds rs. 1,20,000 or his turnover (gross receipts in case of profession) exceeds rs. 10,00,000 in any one of the three immediately preceding years.
  2. In case of newly setup business or profession, his income is likely to exceed rs. 1,20,000 or his turnover (gross receipts in case of profession) is likely to exceed rs. 10,00,000
  3. Where the profits and gains from the business are deemed profits under section 44AE, 44BB or 44BBB and the assessee has claimed his income to be lower than the profits or gains so deemed
  4. Upto Financial year 2015-16 – Where the profits and gains from the business are deemed profits under section 44AD and he has claimed his income to be lower than the profits and gains so deemed and his income exceeds the maximum amount not chargeable to tax during such year.
    From Financial year 2016-17 – where the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year.

Period of maintenance of books: The books of accounts are to kept and maintained for a period of six years from the end of the relevant assessment year. In other words accounts are to be kept for seven years from the last date of financial years.

Bare Act for Sec 44AA

Bare Act for Sec 44AA

(1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the [Assessing] Officer to compute his total income in accordance with the provisions of this Act.

(2) Every person carrying on business or profession [not being a profession referred to in sub-section (1)] shall,—

 (i)  if his income from business or profession exceeds [one lakh twenty] thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds [ten lakh] rupees in any one of the three years immediately preceding the previous year; or

(ii)  where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed [one lakh twenty] thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed [ten lakh] rupees, [during such previous year; or

(iii)  where the profits and gains from the business are deemed to be the profits and gains of the assessee under [section 44AE] [or section 44BB or section 44BBB], as the case may be, and the assessee has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, during such [previous year; or]]

[(iv)  where the profits and gains from the business are deemed to be the profits and gains of the assessee under section 44AD and he has claimed such income to be lower than the profits and gains so deemed to be the profits and gains of his business and his income exceeds the maximum amount which is not chargeable to income-tax during such previous year,] keep and maintain such books of account and other documents as may enable the [Assessing] Officer to compute his total income in accordance with the provisions of this Act.

This clause i.e 2 (iv) has been substituted from financial year 2016-17 by
(iv) where the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year.

(3) The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe, by rules, the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contained therein and the form and the manner in which and the place at which they shall be kept and maintained.

(4) Without prejudice to the provisions of sub-section (3), the Board may prescribe, by rules, the period for which the books of account and other documents to be kept and maintained under sub-section (1) or sub-section (2) shall be retained.

10 comments

  1. Which ITR form Should I File? My income is as under:- Professional (Legal) gross receipts Rs 7.25 lacs , net profit Rs 4.06 lacs & having rental Income Rs 4.00 lacs for the FA 2015-2016. Further I am not maintaining Books of Accounts and not prepare Balance Sheet & Profit & Loss a/c . Please reply

  2. I have filed ITR 2 for fy 2015-16 without indicating losses incurred in F&O.

    As per brokerage ledger, I have incurred losses of 4.0 L

    Do I have to declare losses in ITR 4 and get tax audit done even if I don’t wish to carry forward losses ?

    Can I revise my IT return and claim tax benefit due to losses?

    Can you help me and file my revise return for FY 2015-16 for a fee ?

    • Rohit Pithisaria

      Yes, you are require to revise your income tax return. Also, you are required to show 8% as your business profit from F&O. If you do not wish to show 8% of the profit then you are require to submit audited books of accounts.

      • HARSHAD KHONA

        What will be format of accounting to maintain books.
        I have only financial ledger of broker indicating details of transactions.
        Can this is enough as book of accounts ?

        Pl advise.

        Regards,

        • Prateek Agarwal

          Financial ledger of broker is not a part of your books of accounts .
          You have to maintain your brokers’ ledger, purchase and sale data, bank accounts, cash account and expenses accounts.

  3. Is turnover limit u/s 44AB has been enhanced or the limit of 2crore limit has just enhanced for assesse fall u/s 44 AD

    • Prateek Agarwal

      Limit is increased only for section 44AD.
      Limit under section 44AB remains same i.e 1 crore.

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