Freelancer practicing a specified profession

The specified professions under this category include

• Medical
• Engineering
• Legal
• Architectural
• Company Secretary
• Accountancy
• Interior decoration
• Technical consultancy
• Information Technology
• Authorized representative
• Film artist

The requirement for maintaining the prescribed books of account and other documents shall not apply in relation to any previous year in case of any person :

(a) if his total gross receipts in the specified profession do not exceed 1,50,000 in any one of 3 years immediately preceding the previous year, or

(b) where the specified profession has been newly set up in the previous year, his total gross receipts in the profession for that year are not likely to exceed ₹1,50,000. However, such a person shall have to maintain such books of account and other documents as may enable the Assessing Officer to compute his total income.

In cases other than (a) and (b) books of accounts are required to be maintained mandatory.

The prescribed books of account and other documents under Rule 6F(2) are as follows:

(a) a cash book;

(b) a journal, if the accounts are maintained according to the mercantile system of accounting;

(c) a ledger;

(d) carbon copies of bills, whether machine numbered or otherwise serially numbered wherever such bills are issued by the person and carbon copies or counter-foils of machine numbered or otherwise serially numbered receipts issued by him except if the bill or receipts of an amount less than 25; and

(e) original bills wherever issued to the person and receipts in respect of expenditure incurred by the person or, where such bills and receipts are not issued and the expenditure incurred does not exceed fifty rupees, payment vouchers prepared and signed by the person.

The vouchers mentioned above may not be prepared if the cash book maintained by the person contains adequate particulars in respect of the expenditure incurred by him.

As per rule 6F(3), a person carrying on medical profession shall, in addition to the above books of account and documents, keep and maintain the following also:

(a) a daily case register in Form No.3C;

(b) an inventory under broadheads, as on the first and the last day of the previous year, of the stock of drugs, medicines and other consumable accessories used for the purpose of his profession.

Amendment made by the Finance Bill, 2022:

Definition of books or books of account amended [Section 2(12A) amended w.e.f. 2022-23]

The Finance Bill, 2022 has amended the definition as under. "books or books of account" include ledgers, day-books, cash books, account-books and other books, whether kept in the written form or in electronic form or in digital form or as print- outs of data stored in such electronic form or in digital form or in a floppy, disc, tape or any other form of electro-magnetic data storage device.

Freelancer practicing any other profession

Every other person other than mentioned above and carrying on a business or a profession shall keep and maintain books of account and other documents.

1. In case of a person (other than individual or HUF) [Section 44AA(2)]: Every person carrying on any business or profession must 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 the Income-tax Act, 1961 in the following circumstances:

(i) In case of existing business or profession: In cases where the income from the business or profession exceeds 1,20,000 or the total sales, turnover or gross receipts, as the case may be, in the business or profession exceed 10,00,000 in any one of three years immediately preceding the accounting year; or

(ii) In case of newly set up business or profession: In cases where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed 1,20,000 or his total sales, turnover or gross receipts, as the case may be, in the business or profession are likely to exceed 10,00,000 during the previous year.

1. In case of Individual or HUF :An Individual or HUF carrying on any business or profession must 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 the Income-tax Act, 1961 in the following circumstances:

(i) Existing business or profession: In cases where the income from the existing business or profession exceeds ₹2,50,000 or the total sales, turnover or gross receipts, as the case may be, in the business or profession exceed 25,00,000 in any one of three years immediately preceding the accounting year; or

(ii) Newly set up business or profession: In cases where the business or profession is newly set up in any previous year, if his income from business or profession is likely to exceed 2,50,000 or his total sales, turnover or gross receipts, as the case may be, in the business or profession are likely to exceed 25,00,000 during the previous year.

There is no need to maintain any books of account and documents if the following conditions are satisfied:

(i) Assessee is carrying on a business or a profession and the income or total sales or gross receipts, as the case may be, is less than the specified amount.

(ii) If he is covered under sections 44AD, 44ADA, 44AE, 44BB, or 44BBB, he is not declaring income lower than that which is prescribed under these relevant sections.