Section 44AA of Income Tax Act: Maintenance of Books of Account
Section 44AA of the Income-tax Act, 1961 sets out when businesses and specified professionals must maintain books of account and supporting records. The obligation depends on the type of activity, income, turnover and certain presumptive-tax conditions.
What does Section 44AA require?
Section 44AA(1) requires persons carrying on specified professions to maintain books and documents sufficient to enable the Assessing Officer to compute their total income. Section 44AA(2) applies to other businesses and professions where prescribed financial thresholds or specified presumptive-tax conditions are met.
Section 44AA(3) authorises the Central Board of Direct Taxes (CBDT) to prescribe the books, particulars, form, manner and place of maintenance. Section 44AA(4) authorises rules governing retention periods.
Section 44AA(2): income and turnover thresholds
For businesses and professions other than those specified under subsection (1), the relevant tests ordinarily look to any of the three preceding previous years, or anticipated figures where the activity is newly established.
| Category | Income from business or profession | Sales, turnover or gross receipts |
|---|---|---|
| Individual or HUF | Exceeds Rs. 2,50,000 | Exceeds Rs. 25,00,000 |
| Other persons | Exceeds Rs. 1,20,000 | Exceeds Rs. 10,00,000 |
Meeting either threshold can trigger the requirement. For an existing activity, the statute refers to any one of the three years immediately preceding the previous year. For a newly established activity, the anticipated figures during that year are relevant. Thresholds should not be confused with the separate limits for tax audit under Section 44AB.
Section 44AA(1): specified professions
The provision expressly covers the professions of law, medicine, engineering, architecture, accountancy, technical consultancy and interior decoration, as well as other professions notified by the CBDT in the Official Gazette. The statutory duty to keep adequate books applies to these professions independently of the general thresholds in subsection (2); the exact prescribed records depend on applicable rules.
Rule 6F: which books and documents must be maintained?
Rule 6F of the Income-tax Rules, 1962 specifies books and documents for certain professional taxpayers where the rule's conditions are satisfied. Depending on the professional activity and the rule's applicable thresholds, records can include:
- Cash book recording cash receipts and payments.
- Journal, where accounts are maintained on the mercantile system.
- Ledger and copies of bills issued, and supporting bills or receipts for expenses.
- For medical professionals, prescribed daily case records and inventory details for medicines and consumables, as applicable.
Where a taxpayer is required by Section 44AA to maintain accounts but Rule 6F does not prescribe an exhaustive set, the taxpayer should keep sufficient reliable records to substantiate income, expenditure, assets and liabilities. Digital records should remain accessible and verifiable.
Presumptive taxation and books of account
Special conditions apply when taxpayers report income below the deemed profits under Section 44AE, Section 44BB or Section 44BBB, as referred to in Section 44AA(2)(iii). Under Section 44AA(2)(iv), books are also required when the restriction under Section 44AD(4) applies and the taxpayer's income exceeds the basic exemption limit.
The Section 44AD and Section 44ADA regimes have their own eligibility and compliance rules. Eligibility for presumptive taxation should not be taken to mean that no transaction records or evidence are ever necessary.
Retention, tax audit and non-compliance
For professionals covered by Rule 6F, the prescribed retention period is generally six years from the end of the relevant assessment year, subject to extensions where assessment proceedings or other legal requirements apply. Record retention under other statutes may also be relevant.
Section 271A of the 1961 Act provides for a penalty of Rs. 25,000 for failure to keep, maintain or retain books or documents as required under Section 44AA, subject to applicable relief provisions including Section 273B where reasonable cause is established. A Section 44AB tax audit is a separate compliance requirement.
Practical examples
Example 1: individual retailer
An individual operating a retail business has gross receipts of Rs. 28 lakh in one of the three preceding previous years. The Rs. 25 lakh turnover threshold under Section 44AA(2) is exceeded, so the books-of-account requirement is triggered unless another applicable provision changes the position.
Example 2: professional consultant
An architect carries on a profession expressly listed in Section 44AA(1). The architect must maintain adequate accounts under that subsection. The additional books specifically prescribed by Rule 6F depend on its conditions.
Example 3: new partnership business
A newly formed partnership reasonably expects turnover of Rs. 12 lakh during its first previous year. The general Rs. 10 lakh threshold for persons other than individuals or HUFs is exceeded, triggering Section 44AA(2), subject to other applicable provisions.
Income-tax Act, 2025: transition
The Income-tax Act, 2025 commenced on 1 April 2026. This page preserves and explains Section 44AA of the 1961 Act for years and matters governed by that legislation. For tax years governed by the 2025 Act, check the corresponding record-keeping provisions and applicable rules rather than assuming that 1961 Act section numbers continue unchanged. Transitional and savings provisions may affect older years and pending proceedings.
Official legal sources
- Income Tax Department, Government of India - Acts, rules and departmental guidance.
- India Code - Central legislation, including the Income-tax Acts.
- e-Gazette of India - statutory notifications and amendments.
Consult the consolidated statute, amendments, notified rules and applicable tax-year provisions before relying on a threshold or compliance position.
Frequently asked questions
Who must keep books under Section 44AA?
Specified professionals must maintain records enabling the Assessing Officer to compute income. Other businesses and professions are covered when applicable income or turnover thresholds, or specified presumptive-tax conditions, are met.
What are the thresholds for individuals and HUFs?
Under Section 44AA(2), the increased thresholds for individuals and HUFs are business or professional income exceeding Rs. 2,50,000 or sales, turnover or gross receipts exceeding Rs. 25,00,000, subject to the statutory tests.
Is every professional required to maintain the same books?
No. Rule 6F prescribes specified books for certain professions subject to its conditions. Other taxpayers must maintain adequate records under the applicable provisions.
How long should books be retained?
Rule 6F generally specifies retention for six years from the end of the relevant assessment year for covered professionals, with longer retention where proceedings require it.
Does Section 44AA itself require a tax audit?
No. Section 44AA addresses books and records; audit obligations are determined separately under Section 44AB and other applicable provisions.
Original statutory material and amendment history
Read the original page text and legislative notes
Archived reproduction of the supplied page for historical reference. It includes an apparent transcription error ("twenty-five rupees"); refer to the corrected Rs. 25 lakh threshold explained above. This archive is not a substitute for the current consolidated law.
1(1) 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 Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the 2 Assessing Officer to compute his total income in accordance with the provisions of this Act.
(2) Every person carrying on business or profession not being a profession referred to in sub-section (1) shall,-
(i) if his income from business or profession exceeds 3 one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession exceed or exceeds 4 ten lakh rupees in any one of the three years immediately preceding the previous year; or
(ii) where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed 3 one lakh twenty thousand rupees or his total sales, turnover or gross receipts, as the case may be, in business or profession are or is likely to exceed 4 ten lakh rupees, 5 during such previous year; or
(iii) where the profits and gains from the business are deemed to be the profits and gains of the assessee under 6 section 44AE 7 or section 44BB or section 44BBB, as the case may be, and the assessee has claimed his income to be lower than the profits or gains so deemed to be the profits and gains of his business, as the case may be, during such 8 previous year; or
9 (iv) where the provisions of sub-section (4) of section 44AD are applicable in his case and his income exceeds the maximum amount which is not chargeable to income-tax in any previous year,
keep and maintain such books of account and other documents as may enable the 2 Assessing Officer to compute his total income in accordance with the provisions of this Act.
10Provided that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words "one lakh twenty thousand rupees", the words "two lakh fifty thousand rupees" had been substituted:
Provided further that in the case of a person being an individual or a Hindu undivided family, the provisions of clause (i) and clause (ii) shall have effect, as if for the words "ten lakh rupees", the words "twenty-five rupees" had been substituted.
(3) The Board may, having regard to the nature of the business or profession carried on by any class of persons, prescribe, by rules, the books of account and other documents (including inventories, wherever necessary) to be kept and maintained under sub-section (1) or sub-section (2), the particulars to be contained therein and the form and the manner in which and the place at which they shall be kept and maintained.
(4) Without prejudice to the provisions of sub-section (3), the Board may
prescribe, by rules, the period for which the books of account and other
documents to be kept and maintained under sub-section (1) or sub-section (2)
shall be retained.
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1. Ins. by Act 41 of 1975, s. 11 (w.e.f. 1-4-1976).
2. Subs. by Act 4 of 1988, s. 2, for Income-tax Officer" (w.e.f. 1-4-1988).
3. Subs. by Act 21 of 1998, s. 20, for "forty thousand" (w.e.f. 1-4-1999).
4. Subs. by s. 20, ibid., for "five hundred thousand" (w.e.f. 1-4-1999).
5. Subs. by Act 26 of 1997, s. 10, for "during such previous year" (w.e.f.
1-4-1998).
6. Subs. by Act 33 of 2009, s. 18, for "section 44AD or section 44AE or section
44AF" (w.e.f. 1-4-2011).
7. Ins. by Act 32 of 2003, s. 22 (w.e.f. 1-4-2004).
8. Subs. by Act 33 of 2009. S. 18, for "previous year" (w.e.f. 1-4-2011).
9. Subs. by Act 28 of 2016, s. 24, for clause (iv) (w.e.f. 1-4-2017).
10. Ins. by Act 7 of 2017, s. 19 (w.e.f. 1-4-2018).
Information updated: 25 October 2026. This article is general legal information and not a substitute for advice on specific facts.