Rule 46 — Maintenance of books of account under section 62. Made under s.62 of the Income-tax Act, 2025.
Rule 46 gives effect to Section 62 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) requires every person who must keep and maintain books of account and other documents under section 62(1)(b) to maintain books and documents that enable the Assessing Officer to compute his total income under the Act.
Sub-rule (2) imposes a specific list on every person carrying on the legal, medical, engineering or architectural profession, or the profession of accountancy, technical consultancy, interior decoration, authorised representative or film artist. Sub-rule (3) disapplies that list for a tax year where total gross receipts in the profession do not exceed Rs. 150000 in any one of the three years immediately preceding the tax year, or, for a newly set up profession, where the gross receipts of that year are not likely to exceed that amount.
Sub-rule (4) is the list: a cash book; a journal, if the accounts are maintained according to the mercantile system of accounting; a ledger; copies of bills or receipts issued for sums equal to or exceeding two hundred and fifty rupees; original bills and receipts for expenditure equal to or exceeding two hundred and fifty rupees; and payment vouchers prepared and signed by the person where the expenditure does not exceed two hundred and fifty rupees and the cash book does not contain adequate particulars of it.
Sub-rule (5) defines "authorised representative", "cash book" and "film artist". Sub-rule (6) adds two further requirements for a person carrying on the medical profession: a daily case register in Form No. 25, and an inventory under broad heads, as on the first and the last day of the tax year, of the stock of drugs, medicines and other consumable accessories used for the profession.
Sub-rule (7) fixes where the books are to be kept — at the place of the profession, or at the principal place where the profession is carried on at more places than one, or at the respective places where separate books are maintained for each place. Sub-rule (8) requires books maintained in electronic mode to remain accessible in India at all times, with back-up kept on a daily basis in servers physically located in India. Sub-rule (9) requires the books and documents to be kept for seven tax years from the end of the relevant tax year. Sub-rule (10) requires books kept at the time of reopening of an assessment under section 279, or under section 147 of the Income-tax Act, 1961 as it existed prior to its repeal, to continue to be kept until the reopened assessment is completed.
Section 62(1)(b) requires books of account to be kept but leaves it to rules to say which books, by whom, where and for how long. The rule answers all four. For most persons the test stays functional — whatever enables the Assessing Officer to compute total income — while named professions get a fixed list, because their income is not evidenced by trading stock or manufacturing records. The gross receipts filter in sub-rule (3) keeps the fixed list off small practices, and the electronic-mode and retention requirements exist so the records are still there, and still reachable in India, when an assessment or a reopening needs them.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Gross receipts filter below which the specified list in sub-rule (4) need not be kept | Rs. 150000 | Total gross receipts in the profession do not exceed this in any one of the three years immediately preceding the tax year; for a newly set up profession, gross receipts of that year are not likely to exceed it | Sub-rule (3) |
| Value at or above which copies of bills or receipts issued must be kept | Two hundred and fifty rupees | Sums equal to or exceeding this amount | Sub-rule (4)(d) |
| Value at or above which original bills and receipts for expenditure must be kept | Two hundred and fifty rupees | Expenditure equal to or exceeding this amount, incurred by the person and issued to him | Sub-rule (4)(e) |
| Value below which a signed payment voucher suffices | Not exceeding two hundred and fifty rupees | Only where the cash book does not contain adequate particulars in respect of the expenditure | Sub-rule (4)(f) |
| Frequency of the cash balance in a cash book | At the end of each day, or at the end of a specified period not exceeding a month | A record of all cash receipts and payments kept and maintained day-to-day | Sub-rule (5)(b) |
| Frequency of back-up of electronic books | Daily | Back-up to be kept in servers physically located in India; the books themselves must remain accessible in India at all times | Sub-rule (8) |
| Retention period | Seven tax years from the end of the relevant tax year | Applies to the books and documents specified in sub-rules (1), (4) and (6); extended by sub-rule (10) where an assessment is reopened | Sub-rule (9) |
The filter in sub-rule (3) is not a current-year test: the specified list applies unless gross receipts stayed within Rs. 150000 in each of the three immediately preceding years, so a single year above that figure brings the profession into sub-rule (4). Sub-rule (4)(f) is not an alternative to keeping vouchers for small expenditure generally — it is available only where the cash book itself lacks adequate particulars. The seven-year retention in sub-rule (9) is a floor, not a ceiling: sub-rule (10) keeps books alive beyond it wherever an assessment has been reopened under section 279 or under section 147 of the 1961 Act, until that assessment is completed. Electronic maintenance is permitted, but sub-rule (8) attaches two conditions that are easy to breach in a cloud arrangement — continuous accessibility in India and a daily back-up on servers physically located in India.
An architect's gross receipts are Rs. 1,20,000, Rs. 1,40,000 and Rs. 1,80,000 in the three years immediately preceding the tax year. Because receipts exceeded Rs. 150000 in one of those three years, the exemption in sub-rule (3)(i) is not available and the cash book, ledger, bills and vouchers listed in sub-rule (4) must be kept. He keeps them in accounting software hosted abroad; sub-rule (8) still requires the records to remain accessible in India at all times and the daily back-up to sit on servers physically located in India.
In a scrutiny or survey where the Assessing Officer calls for books, and in the penalty proceedings that follow a failure to produce them; a professional meets it every day in the form of the cash book, bills and, in medical practice, the Form No. 25 daily case register.
shall maintain such books of account and other documents that enable the Assessing Officer to compute his total income under the Act
the back-up of such books of account and other documents maintained in electronic mode, shall be kept on a daily basis in servers physically located in India
shall be kept and maintained for a period of seven tax years from the end of the relevant tax year