Section 62 of the Income Tax Act, 2025 mandates the maintenance of books of account and other documents by persons carrying on business or profession. Understanding who must maintain books of account and what must be maintained is essential for tax compliance.
Who Must Maintain Books of Account
Specified Professions
Any person carrying on a specified profession must maintain books of account. The specified professions are:
- Legal profession
- Medical profession
- Engineering profession
- Architectural profession
- Accountancy profession
- Technical consultancy
- Interior decoration
- Information technology
- Company secretary
- Any other profession notified by the Board
Other Businesses and Professions
Any person carrying on business or any profession (not being a specified profession) satisfying the conditions referred to in Section 62(2) must maintain books of account.
The conditions are:
Income/Receipts Threshold: Where the income from business or profession exceeds Rs. 1,20,000 or its total sales, turnover or gross receipts exceeds Rs. 10,00,000 in any one of the three years immediately preceding the tax year
Newly Set Up Business: Where business or profession is newly set up in the tax year, the income is likely to exceed Rs. 1,20,000 or its total sales, turnover or gross receipts is likely to exceed Rs. 10,00,000 during such tax year
Presumptive Taxation Cases: Where the assessee has claimed income from business or profession to be lower than the deemed profits under Section 58(2) or Section 61(2)
Individuals and HUFs: In case of an individual or Hindu undivided family, the income threshold is Rs. 2,50,000 and the sales/turnover/gross receipts threshold is Rs. 25,00,000
What Must Be Maintained
For Specified Professions
Every person carrying on legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, or profession of authorised representative or film artist, must keep and maintain:
Cash Book: A record of all cash receipts and payments, kept day-to-day and giving the cash balance in hand at the end of each day or at the end of a specified period not exceeding a month
Journal: If accounts are maintained according to the mercantile system of accounting
Ledger: A ledger
Bills/Receipts: For sums equal to or exceeding Rs. 250, copies of bills or receipts issued
Original Bills/Receipts: For expenditure equal to or exceeding Rs. 250, original bills and receipts
Payment Vouchers: For expenditure not exceeding Rs. 250, payment vouchers prepared and signed
For Medical Professionals
In addition to the above, medical professionals must maintain:
Daily Case Register: A daily case register in the prescribed form
Inventory: An inventory under broad heads, as on the first and the last day of the tax year, of the stock of drugs, medicines, and other consumable accessories
Maintenance Requirements
Place of Maintenance
The books of account and other documents shall be kept and maintained at:
- The place where the person is carrying on the profession
- Where the profession is carried on in more places than one, at the principal place of profession
- If separate books are maintained in respect of each place, at the respective places
Electronic Books
Books maintained in electronic mode shall:
- Remain accessible in India at all times
- Have backup kept on a daily basis in servers physically located in India
Retention Period
The books of account and other documents shall be kept and maintained for a period of seven tax years from the end of the relevant tax year.
Where the assessment in relation to any tax year has been reopened, all books of account and other documents which were kept and maintained at the time of reopening shall continue to be so kept and maintained till the assessment has been completed.
Expert Legal Guidance
Understanding the books of account requirements under Section 62 is essential for tax compliance. Anuj Desai & Associates provides expert advisory services on Direct Tax Code compliance, helping businesses and professionals maintain proper books of account and avoid penalties.