Accounts and Audit Requirements

Books of Accounts and Audit Requirements

The Income Tax Law sets out the books of accounts to be kept for income tax purposes. It has been described under Article 44AA and Rule 6F.

Required to keep the books of accounts?

The following professions must maintain accounting records if their total revenue is greater than Rs. 150,000 in the previous 3 years for a career list. This also applies to a newly established profession whose total revenue is expected to exceed Rs 10,000. 1,50,000.

Books Accounts

The accounting records to be booked in Rule 6F were identified:

  • legal
  • Medical
  • Engineering
  • The architect
  • Accounting
  • Technical Consultancy
  • Interior decoration

Authorized representative – a person who represents a person for remuneration before a body or other authority under the law. It does not include an employee of the person represented or the person who performs the accounting profession.
A filmmaker – includes a producer, an editor, a representative, a director, a music director, a technical director, a director, a photographer, a singer, a songwriter, a storyteller, a screenwriter, And fashion designers.
Secretary Company

If you are a freelance entrepreneur pursuing any of these professions, your total receipts are more than Rs. 150000, these rules apply to you.

If the total income of the above professions does not exceed Rs.150,000 in one or more of the previous three years of an existing occupation or a newly established occupation whose total revenue is expected to be less than Rs 1, 50,000 – the professional must keep books of accounts. Unless all books or records are not kept, they are not exactly selected. The only requirement is that AO is able to calculate taxable income from professional ones.

From 18-18 years, the maximum rupee. 150,000 to Rs. 250000.

  • Accounting books defined by Rule 6F
    Cash book
    Record cash and cash payments daily that show the cash balance at the end of the day or at best at the end of each month and not thereafter.
  • Magazine in accordance with the Commercial Accounting System
    The newspaper is a record of all daily transactions. It is a record, in terms of accounting, where the total credits equal the total debt, when we follow the double-entry accounting system, that is, each opponent has a balance against and vice versa.
  • The ledger in which all entries from the magazine flow contains details of all accounts, and this can be used to prepare financial statements.
  • A copy of the invoices or receipts issued by them which are more than 25 rupees
    Bills of original expenses incurred which are more than 50 rupees
  • The following are additional requirements in the case of a person with a medical profession – doctors, surgeons, dentists, pathologists, radiologists, etc.

Record daily cash with patient details, services provided, fees received and date of receipt
Details of stock of medicines, medicines and other consumables used
These books must be kept at the head office or in each office.

How long should these books be preserved?

Records must be kept each year for 6 years from the end of this year.

Not keeping the books of accounts?

If you fail to maintain account records as stated, you may be fined 25,000 rupees or in some cases where you may have international transactions and failed to retain the information and documentation for such transactions – 2% of the value of each international transaction.

It will be hard to keep your books and track all your expenses and income in a systematic way.

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Section 80GG Deduction for Rent Paid

Don’t you  receive  HRA from your employer

Typically, HRA is part of your salary and you can claim a discount for HRA. If you do not receive an HRA from your employer and make payments for rent for any furnished or unfurnished accommodation you occupy for your stay, you can claim a deduction under Section 80GG for the rent you pay. Here are some of the conditions that must be met –

  • You are self-employed or salaried
  • You did not receive HRA at any time during the year you claim 80GG
  • You, your spouse or your minor child in which you are a member do not have any residential housing in the place where you currently reside or perform office duties, work, work or occupation.
  • If you own any residential property anywhere, your income is calculated from the home within the applicable divisions (as a self-owned enterprise), no deduction is allowed under section 80GG.

You will be asked to submit a 10BA form with details of the rent payment.

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Discount – the lowest will be considered as a deduction under this section –

A Rs 5000 per month

(A) 25% of total income (income to exclude long-term capital gains, short-term capital gain under Section 111A and revenue under Section 115A or 115D and deductions 80C to 80U.

(B) actual rent less than 10% of income (income to exclude long-term capital gains, short-term capital gain under Section 111A and revenue under Section 115A or 115D and deductions 80C to 80U.

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Discounts under GST Regime!

Sec.15 of the CGST Act, 2017, reproduced below

The value of the supply shall not include any discount which is given –

  • Before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply
  • After the supply has been affected, if –

    # – Such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices, and
    # –  Input tax credit as is attributable to the discount on the basis of the document issued by the supplier has been reversed by the recipient of the supply.”

Summary:

The logical inference which could be drawn from the plain reading of above provision is:

  • Discount, if mentioned on the face of the invoice, can be reduced from the taxable value of the supply of goods.
  • Discount, even if not mentioned on the face of the invoice can be reduced from the taxable value, if following conditions are satisfied:

i) Discount is established in terms of an agreement before supply. In simple words, both supplier and recipient are aware and have agreed about the discount before the supply.

ii) Discount is linked to a specific supply invoice.

iii) ITC attributable to the discount is required to be reversed by the buyer or recipient of the supply.

tax audit, refund, notice, assessmentGST liability of the supplier would be reduced if both supplier and receiver of the goods or services are aware of the discount before supply.

There will be no differentiation in GST between trade and cash discounts.

In fact, GST segregates the discounts allowed into two categories:

  • Those given before or at the time of supply, and
  • Those given after the time of supply.

Discount allowed before or at the time of supply, and it has been mentioned in the invoice separately, it will not be added in the value of supply.

Example: Company offers a 10 % discount on the sale of goods worth Rs. 200. If the company mentions the discount amount (Rs. 20) separately in the invoice, the value of the taxable supply will be Rs.180 (200–20).

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