Income Tax 2025

Appearance

Maintenance of books of account. ​

62(1) ​

  • (a) Any person carrying on specified profession; or
  • (b) any person carrying on, business; or any profession [not being a profession referred to in clause (a)] and satisfying the conditions referred to in sub-section (2); or
  • (c) any other person carrying on profession notified by the Board in this behalf, shall keep and maintain such books of account and other documents to enable the Assessing Officer to compute his total income under this Act.

62(2) ​

The conditions in respect of persons referred to in sub-section (1)(b) shall be the following:––

  • (a) where the income from business or profession exceeds one lakh and twenty thousand rupees or its total sales, turnover or gross receipts from such business or profession exceeds ten lakh rupees in any one of the three years immediately preceding the tax year; or
  • (b) where business or profession is newly set up in the tax year, the income from business or profession is likely to exceed one lakh and twenty thousand rupees or its total sales, turnover or gross receipts from such business or profession is likely to exceed ten lakh rupees during such tax year; or
  • (c) where during the tax year, the assessee, other than the assessee referred to in section 61(2) (Table: Sl. No. 6), has claimed income from business or profession to be lower than the deemed profits as referred to in section 58(2) or section 61(2); or
  • (d) in case of an individual or Hindu undivided family, clauses (a) and
  • (b) shall be modified to the extent of income from such business or profession exceeding two lakh and fifty thousand rupees and its total sales, turnover or gross receipts from such business or profession exceeding two lakh and fifty thousand rupees.

62(3) ​

For the purposes of this section, the Board may prescribe––

  • (a) the books of account and other documents (including inventories, wherever necessary) to be kept and maintained;
  • (b) particulars to be contained therein;
  • (c) the form, manner and place at which they shall be kept and maintained; and
  • (d) the period for which such books of account and other documents are to be retained.

62(4) ​

In this section, “specified profession” means––

  • (a) legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology or company secretary; or
  • (b) any other profession, as notified by the Board.
Explanation

Section Summary: ​

Section 62 of the new income tax law outlines the requirements for maintaining books of account and other documents for individuals and entities engaged in specified professions, businesses, or other notified professions. The purpose is to ensure that taxpayers maintain proper records to enable the Assessing Officer to accurately compute their total income under the Income Tax Act.

Key Changes: ​

  1. Expanded Scope of Specified Professions: The definition of "specified profession" now includes additional professions such as information technology and company secretary, alongside traditional professions like legal, medical, and engineering.
  2. Threshold Modifications for Individuals/HUFs: For individuals and Hindu Undivided Families (HUFs), the income and turnover thresholds for maintaining books of account have been increased to ₹2.5 lakh (income) and ₹2.5 lakh (sales/turnover/gross receipts), up from ₹1.2 lakh and ₹10 lakh, respectively.
  3. Newly Set-Up Businesses/Professions: The law now explicitly requires newly established businesses or professions to maintain books of account if their income or turnover is likely to exceed the specified thresholds during the tax year.
  4. Deemed Profits Scenario: Taxpayers claiming income lower than deemed profits under sections 58(2) or 61(2) must maintain books of account, regardless of income or turnover thresholds.

Practical Implications: ​

  1. For Professionals and Businesses: Professionals in specified fields and businesses exceeding the income/turnover thresholds must maintain detailed books of account. This includes inventories, receipts, and other documents as prescribed by the Board.
  2. For Individuals/HUFs: Individuals and HUFs engaged in business or profession must maintain books if their income exceeds ₹2.5 lakh or turnover exceeds ₹2.5 lakh, which is a significant relaxation compared to the previous thresholds.
  3. New Businesses: Startups and newly established businesses must assess their projected income and turnover to determine if they fall under the maintenance requirement.
  4. Compliance Burden: Taxpayers must ensure their records are accurate, complete, and retained for the prescribed period to avoid penalties or scrutiny during assessments.

Critical Concepts: ​

  1. Specified Profession: Includes professions like legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology, and company secretary, as well as any other profession notified by the Board.
  2. Deemed Profits: Refers to income computed under sections 58(2) or 61(2), where the taxpayer claims income lower than the deemed profits.
  3. Thresholds:
    • General: ₹1.2 lakh (income) or ₹10 lakh (turnover).
    • Individuals/HUFs: ₹2.5 lakh (income) or ₹2.5 lakh (turnover).

Compliance Steps: ​

  1. Identify Applicability: Determine if you fall under the specified profession, business, or notified category.
  2. Assess Income/Turnover: Check if your income or turnover exceeds the prescribed thresholds.
  3. Maintain Records: Keep books of account, inventories, and other documents as prescribed by the Board.
  4. Retain Documents: Ensure records are retained for the period specified by the Board.
  5. Prepare for Scrutiny: Be ready to provide these records to the Assessing Officer during tax assessments.

Examples: ​

  1. Example 1: A freelance architect earning ₹3 lakh annually must maintain books of account because their income exceeds the ₹2.5 lakh threshold for individuals.
  2. Example 2: A newly established IT consultancy expects ₹12 lakh in turnover in its first year. Since this exceeds the ₹10 lakh threshold, it must maintain books of account from the start.
  3. Example 3: A small grocery store with ₹8 lakh turnover and ₹1 lakh income does not need to maintain books unless it claims income lower than deemed profits under sections 58(2) or 61(2).

This section ensures proper record-keeping, aiding in accurate income computation and reducing disputes during tax assessments.