Maintaining Accounts & Tax Audit Limit- Under Income Tax Act

Maintaining Accounts & Tax Audit Limit- Under Income Tax Act

A tax audit is an important procedure that every business should go through to make sure they’re in compliance with the Income Tax Act. A typical accountancy firm will conduct one, but if your company doesn’t have access or trust enough then you might want to consider hiring a Chartered Accountant yourself! In this article we’ll talk about what’s required of businesses under two different limits: turnover and profit.

In-order to know Account maintenance and Tax audit limit concept, The following details must be made clear

  1. specified professions
  2. non-specified professions

 

What is Specified Profession in terms of Income Tax ?

Section 44AA and Rule 6F of the Income Tax Act list many specified professionals including lawyers, medical doctors (such as nurses), engineers; architects – anyone who uses their skills to provide services or products for sale in India must be registered with notified officially recognized professional bodies if they want it taxed accordingly.

According to Section 44B Act, A Tax audit limit escalate based on the following ambiance
Business

If you have a turnover of more than 1 crore in previous year, then this is the perfect time to invest.

 Professional

If you have earned more than 50 lakh rupees in the last fiscal year out of total sales.

 Presumptive Taxation 

If the person who claims that their profits and gains from running a business are less than those reported on tax documents can prove with documentation, then there’s no way for you to know for sure

The compulsory tax audit can be required by any company with over Rs 1 crore in sales revenue or if you are a professional who has had more than 50 lakhs from your profession. This also applies to companies that are part of presumptive taxation schemes and making less money than what they should have been given as deemed profits due section-by sections within law books themselves for different kinds at times depending on circumstance.

Note :-

What is a Presumptive Taxation?

This new law that came into effect on 1 April 2019 allows the government to tax your income without requiring you file a return. The taxes are estimated at 10% for individuals and 15% on companies, but there’s no need yet of filing returns or paying any fines as long as they meet certain requirements such happens being paid monthly salary above ₹5 lakhs & not be earning profits outside India – so what do we know about people who would.

Why is it mandatory to maintain Accounts ?

The profession who has to maintain accounts are:

 Current profession

In case of an existing profession, wherein gross receipts are more than RS. 1.5 lakhs in all three years immediately preceding the financial year then it is mandatory to maintain books of account and other documents so as assess tax liability on this income according with Indian Income Tax Act(I-T).

 New profession

 The books of accounts that are to be maintained for a new profession in which the gross receipts exceed Rs.1.50 crore are different from those required if income is expected under section 6F only; however, it’s important you follow these guidelines accordingly as they will help calculate taxable incomes correctly according with Indian Tax Law!

 Current Business

 Businesses that have revenue over Rs.2 lakhs or total sales in excess of 25 Lakhs for 3 years running, must maintain books of accounts with the company

The rules are strict when it comes to maintaining financial records and these can be challenging on a small scale business owner like you!

 New Business

 If you’re expecting a profit over 2 lakhs or your total sales exceed 25 lakhs then it’s mandatory to keep books of accounts.

The Income tax Act of India rules 6F provides for a list books and accounts to be maintained. These include:

The following books of accounts must be maintained by all professions and businesses mandatory if they cross the threshold specified under the Income Tax Act.

 1) A cash book is a record of all the money that enters and leaves your business. These books are often maintained from day-to-day with each receipt or payment recorded in date order, so it’s easy to see how much you have on hand at any given time!

 2)The assessee’s journals should follow the mercantile system of accounting.

 3)A general ledger.

4)The person who is able to create carbon copies of bills (whether machine numbered or otherwise serially numbered) exceeding Rs. 25 on any type and size of printing press should be given an opportunity for advancement within their organization!

 5)Original bills and receipts issued to the assessee in respect of their expenditure (payment vouchers if these are not provided). The amount does not exceed Rs. 50,000

The medical professional has to maintain The given requirements:

 

A daily case register in the prescribed form (i.e.,Form 3C) will show date, patient’s name and nature of professional services rendered(e general consultation surgery injection visit etc.) fees received and

The inventory of drugs, medicines and other consumables used for medical professionals is compiled at the beginning and end of a year.

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