Books of Accounts to be maintained under Income Tax Act

By | November 29, 2017
(Last Updated On: November 29, 2017)

Books of Accounts to be maintained under Income Tax Act

What books of account have been prescribed to be maintained by a person carrying on business/profession under the Income-tax Act?

The Income-tax Act does not prescribe any specific books of account for a person engaged in business or in non-specified profession.

“books or books of account” includes ledgers, day-books, cash books, account-books and other books, whether kept in the written form or as print-outs of data stored in a floppy, disc, tape or any other form of electro-magnetic data storage device; [ Section 2(12A ) Income Tax Act 1961)

However, such a person is expected to keep and maintain such book of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of the Act, if:-.

Books of Accounts to be maintained under Income Tax Act

Books of Accounts to be maintained under Income Tax Act

  • For companies the books of account are prescribed under the Companies Act
  • Books of account by a professional, who is engaged in specified profession has to maintain certain prescribed books of account, if the annual receipts from the profession exceed Rs. 1,50,000 in all the three years immediately preceding the previous year (in case of newly set up profession, his annual receipts in the profession for that year are likely to exceed Rs. 1,50,000).

Specified profession covers profession of legal, medical, engineering, architectural, accountancy, company secretary, technical consultancy, interior decoration, authorised representative, film artist or information technology.

[ Rule 6F Income Tax Rules ]  :Books of Accounts by Specified Profession shall be  :-

(i) a cash book;

(ii) a journal, if the accounts are maintained according to the mercantile system of accounting;

(iii) a ledger;

[(iv) carbon copies of bills, whether machine numbered or otherwise serially numbered, wherever such bills are issued by the person, and carbon copies or counterfoils of machine numbered or otherwise serially numbered receipts issued by him:

Provided that nothing in this clause shall apply in relation to sums not exceeding twenty-five rupees;]

(v) original bills wherever issued to the person and receipts in respect of expenditure incurred by the person or, where such bills and receipts are not issued and the expenditure incurred does not exceed fifty rupees, payment vouchers prepared and signed by the person:

Provided that the requirements as to the preparation and signing of payment vouchers shall not apply in a case where the cash book maintained by the person contains adequate particulars in respect of the expenditure incurred by him.]

For more details on the provisions relating to maintenance of books of account you may refer provisions of section 44AA  of Income Tax Act 1961 read with Rule 6F of the Income-tax Rules, 1962.​

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