Maintaining Books of Accounts
As per income tax act under section 44AA gives details of who all are required to maintain books of accounts for the purpose of income tax. Businesses and professions are required to maintain the books of accounts for income tax purpose.
- If gross receipts are more than Rs 2,50,000 in 3 preceding years for an existing profession.
- If gross receipts are expected to be more than Rs 2,50,000 in case it is newly set up profession.
- Technical consultant
- Interior decorator
What covers in Maintaining Books of Accounts:
Books of Accounts comprises day to day business income and expenses and summarize in profit and loss account and balance sheet. Following books covers under this such as:
- Purchase book
- Sales book
- Cash book
- Expenses register
- Journal register
Benefits of Maintaining Books of Accounts:
- Helps us for forecast our business
- Helps to stay organized when dealing with customers and suppliers
- Make it easy to prepare management accounts
- Easy access to critical data
- Avoids penalties
- Make it easy to get funds
Penalty if not Maintaining Books of Accounts:
If you fail to maintain books of accounts as prescribed, you may be charged a penalty of Rs 25,000. some cases where you may have international transactions and you have failed– 2% of the value of each international transaction.
Turnover up to Rs 20 Lakhs
Turnover up to 50 Lakhs