Books of accounts to be maintained in case of small business
As per section 44aa of income tax act 1961 every person who is carrying on a business or profession who are covered under this section has to maintain books of accounts. He has to preserve the books of accounts for a minimum period of 6 years. The Income tax act 1961 has specified the list of books of accounts that are required to maintain for the purpose of income tax.
Who are required to maintain books of accounts?
As per section 44AA of income tax act the following persons carrying on a profession are required to maintain books of accounts if gross receipts exceed Rs 1,50,000 in all the three immediately preceding years or in case of new profession likely to exceed 1,50,000 in the year of startup
5. Technical consultancy
6. Interior decoration
7. Any other profession as prescribed by CBDT.
However in case of persons other than professionals who are not covered in above list are also required to maintain books of account only if the income from business exceed Rs 1,20,000 or total sales exceed 10,00,000 in any of the immediately preceding years.
What are the types of books to be maintained?
As per rule 6F person carrying on business or profession are required to maintain the following books of accounts
1. Cash book
2. Journal (for mercantile system of accounting)
4. Photo copies of bills for more than Rs 25,000
5. Original bills issued and receipts in respect of expenditure incurred.any other payment voucher if issued to be maintained.
Following are the additional books to be maintained in case of medical profession like physicians, surgeons, dentists, radiologists etc.,
Daily cash register with details of patients, fees received, services received and date of receipts.
Daily stock register of drugs, medicine and consumables.
Period for which books of accounts to be maintained
Books have to be maintained for a minimum period of 6 years. Books of accounts are to be maintained at the place where the person is carrying on profession or business.
Failure to maintain books of accounts
Failed to maintain books of accounts or failed to compliance with section 44AA then you will be liable to a penalty of Rs 25,000. Maintenance of books of accounts are not required in case assessee is following presumptive scheme.