Published on Aug 21, 2025
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Understanding Sections 44AA & 44AB – Bookkeeping & Tax Audit Compliance
Introduction
Bookkeeping and auditing are essential for accurate financial reporting. Under the Income Tax Act, Sections 44AA and 44AB specify when businesses and professionals must maintain books of accounts and undergo audits.
Section 44AA – Books of Accounts
- Businesses must maintain books if:
- Income > ₹2.5 lakh OR
- Turnover > ₹25 lakh
- Specified professionals (lawyers, doctors, engineers, architects, IT, etc.) must maintain books if gross receipts exceed ₹50 lakh.
Section 44AB – Tax Audit
- Mandatory if:
- Business turnover > ₹1 crore (₹10 crore if 95% digital transactions).
- Professional gross receipts > ₹50 lakh.
- Must be done by a Chartered Accountant.
- Non-compliance = penalty up to ₹1,50,000.
Why It Matters
- Legal compliance
- Avoiding penalties
- Easier tax assessments
- Builds credibility with banks & investors
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