Limit for maintenance of books of accounts for Businessmen /Professional w.e.f 01.04.2017
Summary :As per Finance Bill 2017 , w.e.f 01.04.2017 FY 2016-17 (AY 2018-19) under Section 44AA of Income Tax Act , every person carrying on any business or profession (other than specified profession of medical, legal, etc.) is required to maintain books of account if income from such business or profession exceeds 2,50,000 or sales/gross receipts exceeds Rs 25,00,000
Before 01.04.2017 : under Section 44AA, every person carrying on any business or profession (other than specified profession of medical, legal, etc.) was required to maintain books of account if income from such business or profession exceeds Rs 1,20,000 or sales/gross receipts exceeds Rs 10,00,000 during the previous year.
Increasing the threshold limit for maintenance of books of accounts in case of Individuals and Hindu undivided family
The existing provisions of clause (i) and clause (ii) of sub-section (2) of section 44AA of the Act cast an obligation on every person carrying on business or profession [other than those mentioned in sub-section (1) such as legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette] to maintain such books of accounts and documents in the previous year to enable the Assessing Officer to compute his total income in accordance with the provisions of Act, provided that the income and total sales or turn over or gross receipts, etc specified in said clauses exceeds rupees one lakh twenty thousand and rupees ten lakh, respectively.
In order to reduce the compliance burden, Finance Bill 2017 proposed to amend the provisions of section 44AA to increase monetary limits of income and total sales or turn over or gross receipts, etc specified in said clauses for maintenance of books of accounts from one lakh twenty thousand rupees to two lakh fifty thousand rupees and from ten lakh rupees to twenty-five lakh rupees, respectively in the case of Individuals and Hindu undivided family carrying on business or profession.
This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.
[Clause 19]
Extract of Relevant Clause 19 of Finance Bill 2017 on Books of Accounts
Amendment of section 44AA.
In section 44AA of the Income-tax Act, in sub-section (2), the following provisos shall be inserted with effect from the 1st day of April, 2018, namely:—
‘Provided that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words “one lakh twenty thousand rupees”, the words “two lakh fifty thousand rupees” had been substituted:
Provided further that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words “ten lakh rupees”, the words “twenty-five lakh rupees” had been substituted.’
Related Post on Budget 2017-18
Budget Speech 2017-18 -Download /Print
Finance Bill 2017 -Download /Print -Budget 2017-18
Memorandum Explaining Provisions in Finance Bill 2017
Updates on Union Budget 2017-18