Should a Home Tutor Maintain Accounting Records?

We’ll continue today from our previous posts on taxes for home tutors. You can also refer to that article to understand what you can claim as a deduction from your income. Let’s understand whether the law requires you to maintain accounting records as a home tutor.

Maintenance of Accounting Records

There is no special rule determining whether a home tutor should maintain accounting records or not. However, there is a general rule for the maintenance of accounts, as per Section 44AA, if your income does not exceed Rs 2,50,000 or your total receipts are not more than 25,00,000 in any of the three preceding years — no books of account are required to be maintained.

In the case of a newly established business, the same rule applies for the first year: If income is expected to be less than Rs 2,50,000 or gross receipts are expected to be less than Rs 25,00,000, you are not required to maintain any books of accounts.

Where the income is more than Rs 2,50,000 or total sales, turnover or gross receipts are more than 25,00,000 in any of the preceding 3 years, such a business or tutor must maintain books of accounts and other documents which may enable the Tax Officer to calculate their taxable income as per the Income Tax Act. However, no specific records are prescribed. As a start it's a good idea to keep a record of all your receipts with dates/months and amounts.

You can also start maintaining a register or an excel file which has all your expenses listed out. Fixed Asset Register in an Excel file should also be prepared if you use any of your assets for the purpose of business, it may help you in claiming the depreciation expense. Further, you should also maintain a student’s register containing particulars of the student such as: 

1. Name of Student
2. Address of Student
3. Name of Parent/Guardian
4. Contact No. of Parent/Guardian and Alternative Contact Number
5. Date of Enrollment
6. Period of Enrollment
7. Fees Applicable
8. Whether fees received or not?
9. Date of receipt of fees
10. Mode by which fees are received.

Above is an illustrative list of the documents and details you should keep. You may add or eliminate the documents/details as per your requirements. However, this will be helpful at the time of filing your return. 

Need help with maintaining accounting records? Reach out to us and we’ll help you with it.

If you have questions or need clarity on any related topic comment or write to us support@cleartax.in