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Section 44AA – Maintenance of Accounts

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. (Limit will be Rs. 2,50,000 for income and Rs. 25,00,000 for turnover in case of Individual and HUF from Financial year 2-17-2018)
  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 (Limit will be Rs. 2,50,000 for income and Rs. 25,00,000 for turnover in case of Individual and HUF from Financial year 2-17-2018)
  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.
  5. Section 44ADA Presumptive taxation for Professionals – The assessee filing return under section 44ADA is not required to maintain books of account under section 44AA.

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.

23 comments

  1. V G Viswanathan

    I was a Consultant to a Private firm for providing advice on Contractual issues.In my return for AY 2016-2017 I had indicated the Code 0607( others). Further I had stated that I am not required maintain books as per 44AA.
    As per the Consultancy contract, I was to attend the office for 3 days a week and my rate per day was fixed. At the end of month, I used to be paid for the days attended at the rates fixed. In other words I was like a salaried employee except that my designation was a consultant and I worked part time. While paying the monthly fees the TDS was deducted @10%.
    My total professional income was Rs.2,71,160/- for FY 2015-16. TDS was 27,116/- My total taxable income including income from other sources was Rs.3,16,980/- . As I am a senior citizen (age 77), I was entitled for full refund.
    I filled up ITR 4 . As I was not maintaining any account books, I had indicated under Sl.No. 53 of Part A, P&L, the Gross Receipt and Gross Profit as Rs.271160, and Expenses as NIL and Net Profit as Rs.2,71,160/-
    I have received notice from IT saying the return as defective under 139 (9) and I was asked todetails of Balance Sheet and P&L in ITR and submit revised return. I explained my position as given above but the have not accepted my clarification and sent notice again asking for revised return. Being an Engineering professional I am not able understand what is to be filled. Can you please guide me as to how to go about the issue. Is there any Grievance Redress mechanism where I can take up matters at higher level .

    • Rohit Pithisaria

      You are required to maintain books of accounts (mandatory) as your income exceeds the limit specified u/s 44AA. Resubmit your return after filing your Balance Sheet and Profit & Loss Account.

  2. Kavitha Ganesan

    What is the service tax rate to be applied on invoices raised related to professional charges (software). what is the tds rate deducted by client on payment.

  3. Jyoti Prasad Basu

    I was salaried employee up to AY 2016-17 and duly filed ITR 1 every year. Recently I have joined in Legal profession as a practicing Advocate.I have no helping hand.My income in AY 2017-18 was around only Rs.30000 from other sources(Interest A/C).Income from profession was nil.Am I to file ITR, if yes in which Form?
    2)In the next year i,e, in AR 2018-19 my income from profession likely to be Rs. 1,50,000 to Rs.2.00,000. Which form to be used. Maintenance of Books of Accounts is necessary? Can I maintain Books of Accounts myself and prepare P&L A/C and Balance Sheet without auditing. In profession, which items are considered as expenditure. Travelling expenses, Rent for Chamber, Electric Consumption exp,cost of stationery, cost of Stamp Papers etc. can be treated as expenditures for the purpose of preparing I&E A/C and P&L A/C.

    • Prateek Agarwal

      1). If your total income is less than Rs. 2.5 lakhs then you are not required to file ITR.

      2). ITR 3 is to be used if you want to file ITR>
      The books of accounts needs to be maintained if the professional income exceeds ₹.250000 from AY 2018-19.
      The books to be maintained are Cashbook, Journals, ledgers used to prepare financial statements, photocopies of bills or receipts issued to you and original bills of expenditure incurred.
      No audit is required in your case.
      Yes, all expenses are allowed as expenditure. Rent,Rates , Taxes, Repairs , insurance etc..incurred for the profession can be allowed as expenditure.

  4. I M GENERAL COMMISSION AGENT MY GROSS RECEIPT IS 809000 ,NET PROFIT 350000. I HAVE NO ANY BOOK ACCOUNT .MY REFUND WILL BE APPROX 70000. HOW I FILL THE PART A OF THE PROFIT AND LOSS ACCOUNT AND PART A OF THE BALANCE SHEET . PLEASE SENT REPLY ON MY EMAIL. IF POSSIBLE PLEASE SEND A SCANNED OR FILLED COPY OF ITR4 PART A BALANCE SHEET & PROFIT & LOSS ACCOUNT AS EXAMPLE . WITH THANKS , A JABBAR

    • Rohit Pithisaria

      You have to make books of account and then you will be able to fill the Balance Sheet and Profit & Loss Account.

  5. biswajit sahoo

    my uncle is a lawyer. he has filed return with an Gross Total Income of Rs. 276000 in ITR 4. but he has missed to upload P/L a/c & B/S. after that he has received the notice u/s 139(9) to show P/L & B/S through section 44AA. is there required any CA certification (tax audit) in P/L & B/S… please guide me.

    • Rohit Pithisaria

      No CA Certification is required to correct defective return u/s 139(9).

  6. Sidambaraselvan

    My profession is Advocate and I am 77 years old male assessee. I am doing only chamber work and notary public work due to old age. My annual gross receipt is 80,000 and below. I am getting Pension to Rs.1,40,000/= from Government. Which form I should use to file income tax return for AY 2017 – 2018. Should I maintain books of accounts under Section 44AA of the Income Tax as legal profession comes under specified profession.

    • Prateek Agarwal

      If your receipt was less than Rs. 1,50,000 in all three preceding year and also in this year than you are not required to maintain books of accounts.

  7. 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

  8. 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.

  9. 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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