Bookkeeping
Bookkeeping Services
Bookkeeping is the key to understanding your business profitability.Creating, maintaining, and managing correct financial records is a critical component of running a successful business. Proper maintenance of books of accounts helps a business to manage its cash flow and meet its financial obligations. Bookkeeping helps your company to generate financial statements, which can help business owners and shareholders plan for the future. Different laws in India mandates maintenance of different sets of books of accounts and preserved for the prescribed number of years.
In India, a registered organization has to maintain Books of Account under: -
- Income Tax Act, 1961
- The Companies Act, 2013
- Goods And Service Tax Act, 2017
Let us understand these requirements in detail-
1. As per Income Tax Act, 1961-
A) FOR SPECIFIED PROFESSION-
As per section 44AA, person carrying on a specified profession would be required to maintain the book of accounts if his or her gross receipts are more than Rs.1,50,000 in previous three years. Specified profession under section 44AA and rule 6F of the Income Tax Act includes professions such as
- Legal
- Medical
- Engineering
- Architectural
- Accountancy
- Technical Consultancy
- Interior Decoration
- Authorized Representative
- Company Secretary
- Film artist
B) FOR BUSINESS AND PROFESSION OTHER THAN SPECIFIED ABOVE-
If the turnover/gross receipts from the business or profession carried on by persons other than individual or HUF is more than Rs. 10 lakhs or the income from business or profession is more than Rs. 1.2 lakhs in any of the 3 preceding years, then it is mandatory to maintain books of accounts. In case of persons being an individual or HUF it is mandatory to maintain books of accounts if the turnover/gross receipts from the business or profession is more thanRs. 25 lakhs or income from business or profession is more than Rs. 2.5 lakhs in any of the 3 preceding years.
Books of accounts as per Rule 6F-
- Cash Book
- Journal
- Ledgers
- Bills and receipts copies
- Daily cash register having details related to all patients, services rendered, fees received and date of receipt (for medical profession)
- Details related to stock of medicines, and other consumables used (for medical profession and pharmaceuticals).
Duration– Books of accounts and other documents specified in rule 6F shall be maintained for a period of 6 years from the end of the relevant assessment year.
Penalty- Failure to comply with the same may result into a penalty of up to Rs. 25,000.
Summarized Limit:
Any professional whose:
| Gross Receipts exceeds | Rs. 1,50,000 in all preceding 3 years |
|---|
Or, any Person other than an individual or HUF carrying on Business whose:
| Total income exceeds | Rs. 1,20,000 in any of the 3 preceding financial years |
|---|---|
Total turnover/sales/gross receipts exceeds | Rs. 10,00,000 in any of the 3 preceding financial years |
Or any individual or HUF carrying on Business whose:
| Total income exceeds | Rs. 2,50,000 in any of the 3 preceding financial years |
|---|---|
Total turnover/sales/gross receipts exceeds | Rs. 25,00,000 in any of the 3 preceding financial years |
- As per Companies Act 2013
Section- 128(1) of the Companies Act 2013, mandates Every company to maintain books of accounts, at the registered office or at any other place that board of directors may decide. If the company is maintaining books at any place other than its registered office, it is mandatory to intimate the same to ROC (Registrar of Company). Further, a company may keep its books of account or other relevant papers in an electronic mode subject to compliance with the requirements prescribed under Rule 3 of the Companies (Accounts) Rules, 2014 (Accounts Rules).
Books of accounts should be maintained-
- Cash flow statement
- Sales and purchases Register,
- Assets and liabilities Register
- Items of cost
- Contract papers, vouchers, writing, documents, minutes, and registers whether in physical or electronic mode.
Duration-Books of accounts shall be maintained for a period of 8 years from the end of the relevant financial year.
Penalty- Failure to comply with the same may result into a penalty of not less than Rs. 50,000 but which may extend to Rs. 500,000.
- As per GST Act 2017-
As per GST Act, every registered person must maintain all records at the principal place of business.
Records to be maintained
- Production of goods
- Sale or purchase of goods and services or both
- Stock of goods
- Input tax credit availed
- Output tax payable and paid and
- Other particulars as may be prescribed of laws
Duration- Books of accounts & related records should be maintained for at least 6 years from the last date of filing of the annual return (31st December of the following year) for that year.
Penalty-Failure to comply with the same may result into a penalty of Rs. 10,000.
Conclusion:
It’s evident from the information above that the maintenance of books of accounts is not an optional for any organization. Every registered entity has to make sure that Books of Accounts should be kept on an accrual basis. If any organization fails to comply with such a requirement, it will have to confront severe penalties. So, maintaining Books of Accounts is hugely vital from a legal standpoint.
‘Here at EazyBahi Solutions, we have highly customised accounting packages to suit your business needs. We provide offline as well as online support as per your requirement. By choosing us, you will be saving a lot of money which would otherwise be spent by you in hiring a personal accountant.’