How to Maintain Books of Accounts — Legal Requirements & Best Practices
By Parul Singh, GST Practitioner · Accounting
Table of Contents
Under Section 44AA, books are mandatory above 1 crore turnover. I see 25,000+ penalties for non-compliance in Delhi.
Section 44AA of the Income Tax Act specifies which persons must maintain books of accounts and what records are required.
Who Must Maintain
- Professionals with gross receipts above ₹25 lakh
- Businesses with turnover above ₹1 crore
- Persons claiming lower income than presumptive taxation limits
- Persons covered under Section 44AB (tax audit)
What Records to Keep
- Cash book
- Journal (if mercantile system)
- Ledger
- Copies of bills/receipts issued
- Original bills for expenses above ₹50
- Bank statements and reconciliation
Books of accounts must be retained for a minimum of 7 years from the end of the relevant assessment year.