Income Tax Law makes a mandatory requirement for businesses and professionals to maintain books of accounts as per Section 44AA and Rule 6F.

A) A person carrying on a specified profession would be required to maintain the book of accounts if gross receipts is more than Rs.1,50,000 in previous three years. Specified profession under section 44AA and rule 6F of the Income Tax Act includes professions such as:

  • Legal
  • Medical
  • Engineering
  • Architectural
  • Accountancy
  • Technical Consultancy
  • Interior Decoration
  • Authorized Representative
  • Company Secretary
  • Film artist

B) Businesses or Professions which are not specified above:

As per section 44AA(2), it is mandatory to maintain books of accounts in the following cases:

  • In case of income from business or profession, book of accounts must be mandatorily maintained if the income exceeds Rs.2,50,000 Or if total sales or turnover or gross receipts exceed Rs.25 lakhs in any one of the three previous years.
  • In case of a new business or profession, if the income is expected to exceed Rs 2,50,000 or the total sales or turnover or gross receipts are expected to exceed Rs 25 lakhs.
  • If the taxpayer is covered under section 44AD or section 44AE or section 44AF and the taxpayer has claimed his income in the income tax return to be lower than the profits or gains deemed under section 44AD or section 44AE or section 44AF respectively.

Note: The limit of Rs. 150,000 has been increased to Rs. 250,000 from FY 2017-18 (AY 2018-19).