Section 44AA of ITA, 1961 : Section 44Aa: Maintenance Of Accounts By Certain Persons Carrying On Profession Or Business

Explanation using Example

Let's imagine a scenario where Dr. Smith is a self-employed cardiologist with a private practice. As a medical professional, Section 44AA(1) of the Income-tax Act, 1961 applies to him, mandating that he must keep and maintain detailed books of account. This would enable the Assessing Officer to accurately compute Dr. Smith's total income for tax purposes. He must record all his earnings from patient consultations, procedures, and any other services provided.

In another instance, consider Ms. Patel, who has started a home-based graphic design business in the current financial year. Her business is not listed under the professions in Section 44AA(1), but she anticipates her income will exceed two lakh fifty thousand rupees, or her sales will likely surpass twenty-five lakh rupees. According to Section 44AA(2), she is required to maintain proper books of account from the outset of her business to ensure her income can be accurately assessed for tax purposes.