Provisions of Sec 44AA under Presumptive Taxation

CA.R.S.KALRA | Last updated: 05 December 2020

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Quick Summary

Section 44AA of the Income Tax Act mandates certain individuals and businesses to maintain specific books of account. This applies to professionals and those engaged in business, with thresholds based on income and gross receipts. The rules, along with Rule 6F, detail which books are necessary and how they should be kept. Failure to comply can result in a penalty of Rs. 25,000.

Sec 44AA of the Act requires certain persons to maintain books of account. The provisions of this section read with Rule 6F of the Income Tax Rules, 1962 relate to maintenance of books by the assessee as well as prescribe the list of books to be maintained. The provisions of Sec 44AA are as under:

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FAQ :

Persons carrying on specific professions like legal, medical, engineering, accountancy, technical consultancy, interior decoration, or any other notified profession are required to maintain books of account. Additionally, individuals engaged in business or profession must maintain them if their income or gross receipts exceed certain thresholds.

For businesses or professions not covered under specific professions, books must be maintained if income exceeds Rs. 1,20,000 or gross receipts exceed Rs. 10,00,000 in any of the three preceding years, or if newly set up and likely to exceed these amounts. For individuals and HUFs, these limits are increased to Rs. 2,50,000 for income and Rs. 25,00,000 for gross receipts.

Yes, if profits and gains from a business are deemed under sections like 44AE, 44BB, 44BBB, or 44AD, and the assessee claims income lower than the deemed profits, books of account must be maintained. This also applies if income exceeds the maximum non-chargeable amount under Section 44AD(4).

If an assessee fails to maintain books of account as required by Section 44AA, a penalty of Rs. 25,000 can be imposed.

Yes, the Board may prescribe, by rules, the specific books of account and other documents to be maintained, the particulars they should contain, and the form, manner, and place of maintenance, considering the nature of the business or profession.