Book-keeping and Maintenance for Business/Profession

Running any business/profession is not only about making money. The taxpayer owes to the society in return and hence is bound to carry all the activities in legal ways. Also he should pay all the applicable taxes to the government. For calculating the taxes payable, taxpayer is required to keep proper records of his business.

Considering the nature of business/profession, complexity involved etc., Income-tax Act has provided certain business/professions in which it is compulsory to keep and maintain proper books of accounts. These professions are called as ‘Specified Professions’. Let us have a look on such specified business/profession- Legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, film artist, company secretary, information technology, authorized representative.

All other business/professions other than the above mentioned are to be treated as ‘Non-specified profession”.

Nature of taxpayers Books of accounts to be kept
Taxpayers carrying specified professions where gross receipts from any of the previous three years is more than Rs. 1,50,000/- Following books to be kept-

Cash book, journal, ledgers, bills, invoices, vouchers etc.

Taxpayers carrying specified professions where gross receipts from any of the previous three years is less than Rs. 1,50,000/- No specific books are prescribed in the Act. However documents, books and other records which are required to calculate taxable income are to be kept.
Taxpayers carrying non-specified professions where gross receipts from any of the previous three years is more than Rs. 10,00,000/-

Or

where average profit from any of the previous three years is more than Rs. 1,20,000/-

No specific books are prescribed in the Act. However documents, books and other records which are required to calculate taxable income are to be kept.
Taxpayers carrying non-specified professions where gross receipts from any of the previous three years is more than Rs. 10,00,000/-

Or

where average profit from any of the previous three years is more than Rs. 1,20,000/-

No books of accounts are required to be kept.
  1. What if taxpayer fails to keep and maintain the books of accounts?

Ans.:- If the taxpayer fails to keep and maintain the books of accounts which are required to be kept then he is liable for penalty of Rs. 10,000/- under section 271A of Income Tax Act.

Click here to know some other penalties.

Summary
Article Name
Book-keeping and Maintenance for Business/Profession
Description
Running any business/profession is not only about making money. The taxpayer owes to the society in return and hence is bound to carry all the activities in legal ways. Also he should pay all the applicable taxes to the government. For calculating the taxes payable, taxpayer is required to keep proper records of his business.
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Publisher Name
myITreturn
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