Section 44AA: Which Books Must You Actually Maintain?
Section 44AA of the Income-tax Act splits into two genuinely different tests depending on whether the taxpayer is in a "specified profession" or not — and the two tests use different thresholds, different logic, and different books entirely.
Specified Professions: One Threshold, Prescribed Books
Section 44AA(1) covers a defined list: legal, medical, engineering, architectural, accountancy, and technical consultancy professions, plus interior decoration and the professions separately notified under Rule 6F — authorised representative, film artist, company secretary, and information technology.
A specified professional whose gross receipts exceed ₹1,50,000 in any one of the three preceding years (or are likely to exceed it in the current year, for a newly set-up profession) must maintain the prescribed books under Rule 6F: cash book, journal (under the mercantile system), ledger, carbon copies of bills and receipts issued (except those under ₹25), and original bills for expenses incurred (except those under ₹50). Medical professionals additionally maintain a daily case register and a year-end inventory of drugs, medicines, and consumables.
Below ₹1,50,000, there's no full exemption. The Rule 6F prescribed format isn't mandatory, but Section 44AA(1) still requires "such books of account and other documents as may enable the Assessing Officer to compute total income" — a lighter obligation, not a zero one.
Everyone Else: Income AND Turnover, Tested Separately
Section 44AA(2) covers all other professions and every business. Books of account are required if, in any of the three preceding years (or for a new business, the current year prospectively), either:
- Income exceeds ₹2,50,000, OR
- Turnover/gross receipts exceed ₹25,00,000
for an individual or HUF — with lower limits of ₹1,20,000 and ₹10,00,000 respectively for every other assessee (firms, companies, AOPs). Either limb alone is enough to trigger the requirement; there's no need for both income and turnover to cross their lines simultaneously.
The Worst-Year Test
Both regimes look at the worst of the three preceding years, not just the most recent one. A business that crossed its threshold two years ago and has since fallen comfortably below it is still caught — the obligation doesn't reset just because the most recent year looks clean.
The 44AD/44ADA Override
An assessee who has opted for the presumptive scheme — Section 44AD for business, Section 44ADA for specified professions — and declares income at or above the deemed rate (8%/6% of turnover for 44AD, 50% of gross receipts for 44ADA) is exempt from Section 44AA for that business or profession. Declaring below the deemed rate withdraws the exemption immediately — and separately risks triggering a compulsory tax audit under Section 44AB(e)/(d).
Frequently Asked Questions
Is a specified professional with receipts below ₹1.5 lakh fully exempt from maintaining books?
No. Below ₹1,50,000, the Rule 6F prescribed format isn't mandatory, but Section 44AA(1) still requires books sufficient to let the Assessing Officer compute total income. There's no receipt level at which a specified profession is fully exempt from all record-keeping.
Do individuals and companies face the same Section 44AA(2) thresholds?
No. Individuals and HUFs test against ₹2,50,000 income / ₹25,00,000 turnover. Every other assessee — firms, companies, AOPs — tests against the lower ₹1,20,000 income / ₹10,00,000 turnover limits.
If turnover crossed the threshold two years ago but not in the most recent year, does the obligation still apply?
Yes. Both the specified-profession and general tests look at any one of the three preceding years, not just the latest — the worst year within that window is what triggers the requirement, and it doesn't lapse just because the current year is below the line.
Does opting for presumptive taxation always exempt a business from Section 44AA?
Only if income is declared at or above the deemed presumptive rate. Declaring below that rate withdraws the 44AA exemption for that business or profession and can additionally trigger a compulsory tax audit requirement under Section 44AB.
CORAA's Section 44AA Books of Account Calculator runs the correct test for the assessee type — the flat ₹1,50,000 specified-profession threshold or the income-and-turnover test with its individual/HUF-versus-others split — against the three-preceding-years worst-case rule, so a business that cleared this year's numbers doesn't get incorrectly marked exempt.