The Income Tax Act has specified the books of accounts that are required to be maintained for the purpose of Income tax. These have been prescribed under section 44AA and Rule 6F.
Who is required to maintain books of account?
Business Income >120000 need to maintain Books of Accounts as per 44AA
Business Sales, turnover, gross receipts > Rs 25 Lakh need to maintain Books of Accounts as per 44AA.
Books of accounts/accounting records have to be maintained if the gross receipts are more than Rs. 1,50,000 in 3 preceding years for an existing profession. This also applies to a newly set up profession whose gross receipts are expected to be more than Rs. 1,50,000.
The accounting records to be kept have been prescribed in Rule 6F. The below professions are required to maintain Books of accounts/accounting records:
Authorized representative — A person who represents another person for a fee before a tribunal or any authority constituted under any law. It does not include an employee of the person so represented or a person who is carrying on the profession of accountancy.
Film artist — This includes a producer, editor, actor, director, music director, art director, dance director, cameraman, singer, lyricist, story writer, screenplay or dialogue writer and costume designers.
If you are a freelancer pursuing any of these listed professions and your gross receipts are more than Rs. 1,50,000, these rules shall apply to you.
If the gross receipts of the Professions listed above are not more than Rs 1,50,000 in any one or more of the preceding 3 years for an existing profession or for a newly set up profession whose gross receipts are expected to be not more than Rs 1,50,000 – the professional is not required to maintain books of accounts as per section 44AA. In such a situation, a professional has to maintain books of accounts which would enable the AO to compute the taxable income of the professional from them.