top of page

Books of Accounts

Accounting & bookkeeping for assets, sales, acquisitions, and get your balance statement, audit, and director's report, ITR filing is taken care of only with Accubucks solution.


5.0 Ratings

Get in touch

Books of Accounts- Meaning, Requirements, Benefits and more 

The Income Tax Act specifies the books of accounts that must be kept for the purpose of income taxation. These are outlined in Section 44AA and Rule 6F.

Accounting is the process of recording, categorizing, summarizing, and evaluating financial data. It is used to track a company's financial performance and make financial decisions.

The process of documenting financial transactions is known as bookkeeping. Data is entered into accounting software, bank balances are reconciled, and financial statements are prepared.

Accounting is built on the basis of bookkeeping. Accounting is the process of summarizing and evaluating financial activities, whereas recording is the process of documenting financial transactions.

books of accounts

Who is responsible for managing books of account?

Books of accounts/accounting records must be kept if the gross earnings for an established profession exceed Rs. 1,50,000 in the three prior years. This also applies to a newly established profession with gross earnings projected to exceed Rs. 1,50,000.


Rule 6F specifies the accounting records that must be preserved. The following professions must keep books of accounts/accounting records:

  • Legal

  • Medical

  • Engineering

  • Architectural

  • Accountancy

  • Technical consultancy

  • Interior decoration

  • Secretary of the corporation

  • Authorized representative – A person who represents another person before a tribunal or other authority established by law for a fee. It does not include an employee of the person so represented or a person engaged in the practice of accounting.

  • Film artist — A producer, editor, actor, director, music director, art director, dance director, cameraman, singer, lyricist, narrative writer, screenplay or dialogue writer, and costume designer are all examples of film artists.

  • These regulations apply to you if you are a freelancer working in any of the aforementioned professions and your gross earnings exceed Rs. 1,50,000.

  • If the gross receipts of the Professions listed above are less than Rs 1,50,000 in any one or more of the preceding three years for an existing profession or less than Rs 1,50,000 for a newly established profession, the professional is not required to keep books of accounts as per section 44AA. In such a case, a professional must keep books of accounts that allow the AO to calculate the professional's taxable income from them.

Specified books of account in accordance with Rule 6F 

  • A cash book is a record of daily cash collections and payments that shows the cash balance at the end of the day or, at the very least, at the end of each month.

  • A notebook based on the mercantile accounting system A diary is a record of all daily transactions. When using the double entry method of accounting, it is a record in which total credits match total debits, i.e. each debit has a corresponding credit and vice versa.

  • A ledger in which all entries flow from the notebook and where all accounts are detailed this may be used to produce financial statements.

  • Photocopies of invoices or receipts worth more than Rs 25 provided by you

  • Original invoices of expenses spent by you that exceed Rs 50 


Additional criteria apply to medical professionals such as doctors, surgeons, dentists, pathologists, radiologists, and others.

  • Daily cash register containing patient information, services provided, fees collected, and date of receipt

  • Details about the pharmaceuticals, medicines, and other consumables in stock

How long should these records be kept?

The books for each year must be preserved for a period of six years from the end of that year.

Failure to maintain books of accounts: If you fail to maintain books of accounts as prescribed, you may be charged a penalty of Rs 25,000 or, in some cases, 2% of the value of each international transaction if you have failed to maintain information and documents for such transactions. Maintaining your books of accounts and keeping track of all your expenses and revenue in a thorough manner would be prudent.

When is bookkeeping not required?

  • No books of account are required if the revenue does not exceed Rs 1,20,000 or total sales, turnover, or gross receipts do not exceed Rs 10,00,000 in the previous three years. The same criterion applies to a newly established profession or business where revenue is estimated to be less than Rs 1,20,000 or sales/turnover/gross receipts are expected to be less than Rs 10,000.

  • Where the income exceeds Rs 1,20,000 or the total sales, turnover, or gross receipts exceed Rs 10,00,000 in the previous three years, such professions or businesses must keep books of accounts and other documents that will allow the Assessing Officer to calculate their taxable income under the Income Tax Act. There are no particular records required. In the event of a newly established profession or business, the same criterion applies when revenue is estimated to exceed Rs 1,20,000 or sales/turnover/gross receipts exceed Rs 10,000.

  • Sections 44AD and 44AE apply to professions and businesses. Businesses protected by sections 44AD and 44AE are exempt from keeping books of accounts. Taxpayers who allege that their business revenue is less than the presumptive income determined under section 44AE, on the other hand, must keep books of accounts as stated in section 44AA and have them audited under section 44AB. To argue that their income from business or profession is smaller than the presumed income estimated under section 44AD/44ADA, a taxpayer may switch from presumptive taxation to regular taxes. If the income exceeds the basic exemption level of Rs 2,50,000, books of accounts must be kept and audited as required by section 44AA. 

  • A taxpayer whose turnover is less than Rs 25 lakh but whose total income exceeds the maximum amount not payable to tax is exempt from maintaining books of accounts under 44AA.

What are the Audit Requirements? 

Audit of accounts is compulsory by a Chartered Accountant for the following purpose:


  • If your total sales, turnover, or gross receipts exceed Rs. 1 crore. 

  • If gross receipts exceed Rs. 50 lakh

  • If the business's revenue is less than the presumptive income determined under Section 44AD and the person's total income exceeds the maximum income exempt from tax.

  • If the business's income is less than the presumptive income established under Section 44AE.

  • If the income of the profession is less than the presumptive income computed in accordance with Section 44ADA and the person's total income exceeds the maximum income free from tax.

Penalty if required accounting documents are not kept in accordance with Section 44AA.

If the taxpayer fails to keep accounting records as required by Section 44AA, a penalty under Section 271A may be imposed. The highest fine that may be imposed is Rs. 25,000. However, if the taxpayer can demonstrate that the failure to preserve accounting records was due to a justifiable cause, the penalty may be waived.

A penalty may be imposed under Section 271B if the taxpayer fails to have the accounting records audited or to provide an audit report as required by Section 44AB. The smallest penalty that can be imposed is 0.5% of total sales, turnover, or gross revenues. The maximum fine is Rs. 150,000. However, if the taxpayer has a good justification for failing to have an audit performed, such a penalty may not be imposed. 

Accounting and Auditing - Why is Accounting and Auditing Important?

Accounting and auditing are two critical operations for an organization that deal with its financial activities and records

Accounting and audit play critical roles in every business's financial activity and record-keeping procedure. Their duties and objectives, however, are distinct. While accounting refers to a much broader topic that includes everything, including the flow of money from the organization to the company's management, auditing is a more specialized function.

Auditing is a component of the accounting profession. It is an independently conducted assessment of accounting and financial records. This is done to evaluate whether the corporation or business activity has followed the laws and widely accepted accounting rules in its operations.

What are Accounting and Auditing?



Accounting is one of the most important roles of a firm. Accounting is the process of recording, categorizing, summarizing, analyzing, and presenting an organization's financial records, transactions, profitability, statements, and financial condition. It is the process of documenting a company's financial transactions.


An organization's accounting is often handled by its own workers. Accounting financial statements are a succinct overview of financial activities during an accounting period. Accounting is divided into several fields, including cost accounting, financial accounting, management accounting, and so on. Accounting reports assist managers in making sound company choices.




Auditing is the inspection of an organization's financial statements or records. After the final production of the financial accounts and statements, auditing is performed. It entails conducting an examination and statutory audit of the financial statements. 


Auditing provides an unbiased and fair judgement on whether the financial records and statements provide a fair and truthful portrayal of the organization's real financial status. Auditors, who are typically external individuals or businesses, carry out the auditing process on behalf of regulators or shareholders in accordance with the rules of the applicable legislation. 


Internal and external auditing are the two basic types of auditing. Internal auditing is performed by an internal auditor, who is usually an employee of the organization. An external auditor is appointed by the shareholders to conduct the audit.  

What is the Purpose of Accounting and Auditing? 

Accounting, regardless of the size of the organization, assists in keeping track of all financial operations. It accurately records all financial operations that occur, which is critical information for your company's management. 


When a company's or organization's books are kept up to date in line with generally accepted accounting standards, business owners may assess the company's performance and conduct peer-to-peer comparisons. This is a critical part of establishing and sustaining reputation with rivals and vendors. 


Accounting can help in identifying areas of underperformance and those in need of remedial action. Accounting information also aids in the long-term project planning of the organization. The financial health of the company influences how much credit may be granted and at what interest rates, among other things. Investors will have a comprehensive picture of the risks and opportunities that the firm may present. Maintaining the accounts will help you when it comes time to pay your taxes, file your returns, and claim deductions.


Auditing is necessary since it provides an unbiased assessment of the business. Auditing frequently identifies mistakes that may occur in corporate processes, allowing business owners to make adjustments to correct them. It also ensures transparency.


External auditing contributes to the business's credibility, improves relationships with suppliers/clients, and ensures a favorable public image. Because the auditing procedure has already been completed, it will be easier to sell the firm in the future. It can also help the company's credit rating. As a result, investors and banks are interested.


Documents Required for Books of accounts & audit 

The documentation required will vary depending on the service you require at any given time. Depending on your needs, our professionals will explain the list to you. Check your eligibility now 


FAQs on Books of accounts & audit 

Question: What is bookkeeping?
Answer: The process of documenting financial transactions is known as bookkeeping. Data is entered into accounting software, bank balances are reconciled, and financial statements are prepared. 

Question: I launched my company a few months ago. There are hardly no transactions. Should I hire a full-time accountant?

Answer: No, if you have a small firm with few transactions, you do not need to hire an accountant full-time. A competent accounting firm can handle your accounting and bookkeeping needs.

Question: I've completed 500 deals this year. What extra charges are there?

Answer: The additional expenses will be determined by the services that you require. However, the accountant's time will be charged on an hourly basis.

Question: I already have accounting software for my company. Can your employees use the same software?

Answer: Yes, our specialists can work with the same accounting software that you do. This will make integrating with your existing systems and procedures easier

Question: Could you please inform me which accounting application would be used?

Answer: The accounting software that will be utilized will be determined by your individual requirements.

Question: Can I customize my payroll services to fit my specific business needs?

Answer: Yes, many payroll service providers offer customizable packages to suit your business requirements. You can typically choose from a range of services to create a tailored solution.

Question: I don't use any accounting software. Is there any software included in this bundle?

 Answer:  Yes, we can give you with accounting software access. We can also assist you with installing the software and training your employees on how to utilize it.

bottom of page