Maintenance of Books of Accounts Under Income Tax Act, GST Act & Companies Act

Books of accounts including vouchers and receipts are required to be maintained under different statutory laws – Income Tax Act, Companies Act 2013 and GST Act. Books to be maintained, retention period and compulsion requirements are different under all the 3 laws.

Maintenance of Books of Accounts Under Income Tax Act

If the sale/turnover/gross receipts from the business or profession is more than Rs. 25,00,000 or the income from business or profession is more than Rs. 2,50,000 in any of the 3 preceding years, then books of accounts will be compulsorily maintained.

Following professions are covered under this provision:

• Legal
• Medical
• Engineering
• Architectural
• Accountancy
• Technical consultancy
• Interior decoration
• Authorised Representative (one who charges fees for representing someone before the tribunal or any authority)
• Film artist (producer, editor, actor, director, music director, art director, dance director, cameraman, singer, lyricist, story writer, screenplay or dialogue writer and costume designers.
• Company secretary

Thus, if the above-mentioned professions have an income of more than Rs. 2,50,000 in any of the 3 preceding years, they need to maintain books of accounts. In case of a new profession also, if the income is expected to be more than Rs. 2,50,000, the professionals should maintain books.  

Books of accounts as per Rule 6F

• Cash Book
• Journal
• Ledgers
• Copies of bills or receipts
• Daily cash register with details of patients, services rendered, fees received and date of receipt (persons carrying on medical profession)
• Details of stock of drugs, medicines, and other consumables used (persons carrying on medical profession)

If the income isn’t more than Rs. 2,50,000 in any of the 3 preceding years or not expected to be more than Rs. 2,50,000 in case of a new profession, then also books should be maintained. However, books, in this case, haven’t been specified – so any books can be maintained but it should be such that ATO can calculate the income. Books should be maintained for a period of 6 years from the end of the relevant year.

Maintenance of Books of Accounts Under Companies Act

Every company has to maintain books of accounts, at the registered office or any office that the board of directors may decide. If the company is maintaining books at an office other than the registered office, it has to intimate the same to RoC. The company can maintain the accounts electronically also.

Duration for which the books needs to be maintained

Books should be maintained for a period of 8 years from the end of the relevant financial year.

Books of accounts to be maintained

• Cash flow statement
• Records of sales and purchases
• Records of assets and liabilities
• Items of cost
• Deeds, vouchers, writing, documents, minutes, and registers whether in physical or electronic mode

Maintenance of Books of Accounts Under GST Act

Every registered person has to maintain GST records at the principal place of business.

Records to be maintained

• Production or manufacture of goods
• Inward and outward supply of goods or services or both
• Stock of goods
• Input tax credit availed
• Output tax payable and paid and
• Other particulars as may be prescribed

Duration for which the books needs to be maintained

Books and records should be maintained for 6 years from the last date of filing of the annual return (31st December) for that year.

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