Accounting records are required for income tax purposes according to section 44AA of income tax act and Rule 6F. A company’s financial accounts are the official record that documents the earnings and expenditures made by the company throughout the course of its operations.
Section 44AA of Income tax Act of 1961 is the subject of this article. As well as the circumstances when no books need to be kept, we will look into who is responsible for maintaining the books of accounts as well as the papers that must be preserved.
Income tax records must be kept in accordance with section 44AA of income tax act and Rule 6F of the Income Tax Regulations. A company’s books of accounts are indeed the formal records that record the company’s earnings and expenditures. As a result, the tax liability can be concluded more quickly.
It is discussed in Section 44AA of income tax act that who is responsible for maintaining records, what papers are necessary, and how long the records must be kept. That information will be provided in the next section.
To what extent is Section 44AA of the Indian Penal Code liable for bookkeeping?
Every person engaged in the practice of law, medicine, engineering, architecture, or the professions of accountancy, technical work, interior design, or any other profession as may be prescribed by the Board in the Official Gazette shall maintain and update those very books of account as well as other documents could be prescribed by the Board in the Official Gazette.
Here’s everything you must know about 44AA Income Tax
Other Persons are covered by section 44AA of the income tax act if they maintain books of accounts: Other than those people who belong to any other profession or in some kind of business comes in Section 44AA of income tax act, the bookkeeping requirement law applies to any individual in any other work or doing any other business if either the revenue from trade or business having more than Rs 120000 or the revenue or net income surpasses Rs 10 lakhs compared to last 3 years.
What kind of accounts must be maintained to comply with Section 44AA of income tax act?
A “maintenance of register or account books” indicates the procedure of keeping track of every small or big business transaction carried out by an individual or company within a taxation period.
An account book containing the records of all the transactions or cash receipts, payments, and cash balances on a daily basis is recorded in a cash book.
Bookkeeping with a Mercantile Accounting Method
Genuine and verified copies of all the receipts, as well as bills, are provided with the assessee’s signature, each with a unique serial number. This is only applicable if the amount goes beyond Rs25,000 in any kind of transaction.
Expenses that are mentioned in the records or the book must be supported by authenticated bills & receipts. As an alternative, if invoices and receipts are not available and the spending is less than Rs. 50,000, the individual can generate or enter the data of the transaction into the cash register.
The professionals from the healthcare or medical sector are also required to keep a regular cash register or accounting book in Form 3C along with the regular entry in an Inventory book, which keeps track of the stock of medications, pharmaceuticals, injections, instruments, along with other items that are utilized in the practice of medicine.
It is necessary to keep all important account data and papers at the location of the business and keep it at the headquarters if there is more than one branch. After the conclusion of the relevant assessment year, these records must be retained for a period of six years. In order to guarantee that you will not engage in any kind of tax fraud, it is essential that you keep adequate data of your transactions. In case you come under investigation for income tax evasion or fraud, the Officer may examine your transaction records.
The location where such books of accounts are to be stored is specified. – The person is required to keep the account books at the location where he is carrying on his profession, or if the profession is conducted in more than one place at the major place where the profession is conducted, according to subsection (3) of section 44AA of income tax act. For purposes of this section, a person who keeps as well as maintains distinct books of account in regard to each place in which the profession is undertaken may preserve and maintain these books of account as well as other documents at each of the locations in which the profession is carried on.
To know more about section 44AA of income tax act, click here: https://navi.com/blog/everything-about-section-44aa/
If you wish to know more about the act in detail then you must get in touch with the experts online and get details from them for a better understanding.