Books of accounts are the records, which maintain the day to day business operations of all the business establishments and taxpayers, to know results of their operations.
Books of accounts should be registered annually. For certificates like certificate of registration (COR) with the Bureau of Internal Revenue (BIR), these books of accounts are required. They are maintained for six years from the end of the relevant assessment year. These are maintained at the head offices or at each of the offices.
Professionals like legal, medical, engineering, architectural, accountancy, technical consultancy, interior decorations and who are notified by the Central Board of Direct Taxes (CBDT) in future, maintain the books of accounts.
As per the income tax Act, failure in maintaining these books as per section 44AA or rule 6F, professionals may have to pay a penalty of Rs.25000/- unless they provide reasonable justification like the bank statements, cash vouchers, bills, fixed asset registers etc. to the officer.
Books of accounts can be of three types, which are as follows −
Other benefits in maintaining the books of accounts are as follows −
|Books of accounts||For service business||For business (sales of goods/properties)|
|General journal||General journal|
|General ledger||General ledger|
|Cash receipt journal||Cash receipt journal|
|Cash disbursement journal||Cash disbursement journal|
To maintain books of accounts in electronic form, it should satisfy the below mentioned conditions −