Therefore, these small traders or businessmen need to maintain proper books of accounts for the purpose if their turnover or profits cross the threshold limits. However, not all need maintain the same.
Traders should note that any business or profession that has an annual turnover or gross income that exceeds Rs 10 lakh in revenues/turnover and net profit of Rs 1.2 lakhs, must maintain such books of account and documents from which its income can be reasonably ascertained by the department.
Of course, after that they would have to ascertain their profits after deduction of expenses and pay income tax as per the prevailing slab.
In the case of a new business, if the concerned business person feels that the income is likely to exceed the threshold mentioned above, one needs to pay tax.
Is auditing than necessary?
When the business reaches a certain scale the accounts have to be audited by a Chartered Accountant. For that the following norm shall be applicable:
i) An individual carrying on business shall get his accounts audited if the total sales, turnover or gross receipts in business exceed Rs 60 lakhs in the previous year. Previous year begins with April and end in March the following year.
(ii) Every person carrying on profession shall get his accounts audited if his gross receipts exceed Rs 15 lakhs in the previous year.