It’s a healthy practice to maintain books of accounts for entrepreneurs, like many others this responsibility often falls upon the own shoulders. But being one's own bookkeeper or tax preparer is just a stopgap solution and the owner should look for long term solutions.
Businesses including both private and public companies and branches of foreign companies are required to be audited by independent certified public accountants. Most companies have voluntarily adopted 31 March as the date for preparing their financial statements because a uniform accounting year ending on 31 March is required for tax purposes in India.
Company accounts must be prepared according to the accrual basis of accounting and on a historical-cost basis, but revaluation of capital assets is permissible. The Companies Act prescribes the form and content of the balance sheet and the information to be disclosed in the Profit and Loss Account
In India, books of accounts are maintained as per the guidelines and accounting standards prescribed by The Institute of Chartered Accountants of India [www.icai.org] for various businesses and also based on formation like Companies/LLP/Partnership Firm/Proprietor. Amongst the various reasons, one of the primary reasons to maintain books is due the tax requirements and regulatory return filling at various frequencies to regulatory authorities. Given below are the important links
- Income Tax www.incometaxindia.gov.in/
- Sales Tax http://mahavat.gov.in/Mahavat/index.jsp
- Service Tax www.servicetax.gov.in/
- Companies Act http://www.mca.gov.in/Ministry/pdf/Companies_Act_1956_13jun2011.pdf
Under Section 209 of Companies Act 1956
Limited Liability Partnership
Under Section 34 of LLP Act 2008
Under Indian Partnership Act, 1932 & Under Income Tax Act *
Under Income Tax Act *
*Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Central Board of Direct Taxes (CBDT) in the Official Gazette shall keep and maintain such books of account and other documents as may enable the [Assessing] Officer to compute his total income in accordance with the provisions of this Act.
It is mandatory to maintain books of accounts u/s 44AA(1) of the Income Tax act for business having annual Turnover of INR one Million (USD 20K) or gross receipts of INR 120,000 (USD 2000) for profession.
It is mandatory to get books of accounts audited under section 44AB of Income Tax Act for business having annual turnover/gross receipts of INR 10 Million (USD 200K) and INR 2.5 Million (USD 50K) for person carrying profession respectively.]
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