Taxation: Mandatory Books of Accounts

Mandatory Books of Accounts
Sunday, March 21, 2010

For businesses, professionals & manufacturers

Benefits of maintaining books of accounts:

Disavantages of non-maintaining books of accounts:

Profit and loss cannot be calculated.
During audit declared results can be rejected resulting in furter tax liability.
Penalty can be imposed.
Books of accounts to be maintained by a compnay.

Books of accounts for Businesses:

With income up to Rs.200,000/-

Serially numbered and dated cash-memo / invoice /receipt for each transaction of sale or receipt.
Daily record of receipts, sales, payments, purchases and expenses; a single entry in respect of daily receipts, sales, purchases and different heads of expenses will suffice; and
Vouchers of purchases and expenses.

With business income exceeding Rs. 200,000
(excluding wholesalers, distributors, dealers and commission agents:

Serially numbered and dated cash-memo / invoice /receipt for each transaction of sale or receipt.
Cash book and/or bank book or daily record of receipts, sales, payments, purchases and expenses; a single entry in respect of daily receipts, sales, purchases and different heads of expenses will suffice;
General ledger or annual summary of receipts, sales, payments, purchases and expenses under distinctive heads;
Vouchers of purchases and expenses and where a single transaction exceeds Rs. 10,000 with the name and address of the payee; and
Where the taxpayer deals in purchase and sale of goods, quarterly inventory of stock-in-trade showing description, quantity and value.

Books of accounts for Professionals:(like medical practitioners, legal practitioners, accountants, auditors, architects, engineers etc.)

Serially numbered and dated patient-slip / invoice /receipt for each transaction of sale or receipt.
Daily appointment and engagement diary in respect of clients and patients: Provided that this clause shall not apply to general medical practitioners;
Daily record of receipts, sales, payments, purchases and expenses; a single entry in respect of daily receipts, sales, purchases and different heads of expenses will suffice; and
Vouchers of purchases and expenses.

Books of accounts for Manufacturers (with turnover exceeding Rs. 2.5 million):

Serially numbered and dated cash-memo / invoice /receipt for each transaction of sale or receipt.
Cash book and/or bank book;
Sales day book and sales ledger (where applicable);
Purchases day book and purchase ledger (where applicable);
General ledger;
Vouchers of purchases and expenses and where a single transaction exceeds Rs. 10,000 with the name and address of the payee; and
Stock register of stock-in-trade.

For details see rule 30 of Income Tax Rules 2002!

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