Section 62 · Computation of total income
Section 62 of the Income-tax Act, 2025 — Maintenance of Books of Account for Business and Profession
By CA Rajat Agrawal
Updated 04 Jul 2026
Chapter IV
📜 What the law says — Section 62, Income-tax Act 2025
62. (1)(a) Any person carrying on specified profession; or
(b) any person carrying on, business; or any profession [not being a profes-
sion referred to in clause (a)] and satisfying the conditions referred to
in sub-section (2),
shall keep and maintain such books of account and other documents to enable the
Assessing Officer to compute his total income under this Act.
(2) The conditions in respect of persons referred to in sub-section (1)(b) shall be
the following:—
(a) where the income from business or profession exceeds ` 120000 or its
total sales, turnover or gross receipts from such business or profession
exceeds ten lakh rupees in any one of the three years immediately preced-
ing the tax year; or
(b) where business or profession is newly set up in the tax year, the income
from business or profession is likely to exceed ` 120000 or its total sales,
turnover or gross receipts from such business or profession is likely to
exceed ten lakh rupees during such tax year; or
(c) where during the tax year, the assessee referred to in section 58(2) or
61(2) (Table: Sl. Nos. 4 and 5), has claimed income from business or
profession to be lower than the deemed profits as referred to in section
58(2) or section 61(2); or
(d) in case of an individual or Hindu undivided family, clauses (a) and (b)
shall be modified to the extent of income from such business or profession
exceeding ` 250000 and its total sales, turnover or gross receipts from
such business or profession exceeding twenty-five lakh rupees.
(3) For the purposes of this section, the Board may prescribe—
(a) the books of account and other documents (including inventories, wher-
ever necessary) to be kept and maintained;
(b) particulars to be contained therein;
(c) the form, manner and place at which they shall be kept and maintained;
and
(d) the period for which such books of account and other documents are to
be retained.
(4) For the purposes of this section, the expression “specified profession” means—
(a) legal, medical, engineering, architectural, accountancy, technical consul-
tancy, interior decoration, information technology or company secretary;
or
(b) any other profession, as may be notified by the Board in thi
In plain language
What Section 62 says in plain English
Section 62 of the Income-tax Act, 2025 is the law that tells you when you must keep proper books of account for your business or profession, and gives the Central Board of Direct Taxes (CBDT) power to prescribe what books to keep, how to keep them and how long to retain them. It is the direct successor to the old Section 44AA of the Income-tax Act, 1961, carried into the new Act (effective 1 April 2026) with cleaner drafting and updated thresholds.
The core idea is simple: your books must be detailed enough to let the Assessing Officer compute your total income. If you cannot show how you arrived at your profit, the tax officer can estimate it — usually to your disadvantage.
Who must maintain books of account
- Specified professionals — those in legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, information technology, company secretary, authorised representative and film artist work. Information technology and company secretary are now expressly listed. These professionals must keep books once gross receipts cross a modest limit.
- Any other business or profession — you must keep books if your income exceeds ₹1,20,000 OR your total sales, turnover or gross receipts exceed ₹10,00,000 in any one of the three years immediately preceding the tax year.
- Individuals and Hindu Undivided Families (HUFs) — get a higher relaxed limit: books are required only if income exceeds ₹2,50,000 OR turnover/receipts exceed ₹25,00,000. This spares small proprietors and family businesses.
- Newly set-up businesses — the test is applied to the likely income or turnover in that first tax year itself.
What "books of account" means (Rule 46)
The CBDT has prescribed the actual list through the Income-tax Rules (Rule 46). In practice you should maintain:
- Cash book — a day-to-day record of all cash received and paid.
- Journal — if you follow the mercantile (accrual) system.
- Ledger — account-wise summaries.
- Carbon copies of bills/receipts above ₹250 that you issue.
- Original bills and vouchers for expenses above ₹250; signed payment vouchers for smaller amounts.
- Doctors additionally keep a daily case register (patients, fees, diagnosis) and an inventory of medicines and consumables.
Electronic records and retention
- Books kept electronically must remain accessible in India at all times, with daily backups on servers physically located in India.
- Books and documents must be retained for seven tax years from the end of the relevant tax year. If an assessment is reopened, keep them until that matter is closed.
How it connects to other sections
Section 62 is the foundation for the tax audit requirement (Section 63, the successor to Section 44AB) — you can only be audited if you first have books. It also interacts with the presumptive taxation schemes: if you validly opt for presumptive income under the 44AD/44ADA-type provisions of the new Act, you are largely relieved from maintaining detailed books, but the moment you declare lower profits and cross the income limit, Section 62 kicks back in.
Penalty for not complying
Failure to keep, maintain or retain books as required attracts a penalty of ₹25,000 under Section 441 of the Income-tax Act, 2025. Beyond the fine, missing books invite best-judgment (estimated) assessment, disallowance of expenses and higher scrutiny.
💡 Example
Example 1 — A freelance IT consultant (individual). Riya runs a software consultancy as a proprietor. In the tax year 2026-27 her gross receipts are ₹9,00,000 and net income ₹4,80,000. Because information technology is now an expressly specified profession, the low ₹1,50,000 gross-receipts test applies to her, not the general ₹2,50,000 individual limit. Since ₹9,00,000 comfortably exceeds ₹1,50,000, Riya must maintain full books of account — cash book, ledger, and all bills above ₹250 — and keep them for seven tax years.
Example 2 — A small kirana (grocery) shop owned by an HUF. The Sharma HUF runs a grocery store with turnover of ₹22,00,000 and income of ₹2,10,000 in 2026-27. This is an ordinary business, not a specified profession, so the relaxed HUF limits apply: books are required only if income exceeds ₹2,50,000 or turnover exceeds ₹25,00,000. Both figures are below the limits, so the Sharma HUF is not compelled to maintain formal books under Section 62 (though basic records are still wise, especially if they claim expenses).
A short story. Arjun, a young interior decorator, treated a shoebox of loose invoices as his "accounts." When a scrutiny notice arrived, he could not reconstruct which receipts matched which project. The officer estimated his income higher than he actually earned and levied a ₹25,000 penalty for not maintaining books. His neighbour Meera, a CA who kept a tidy ledger with daily backups on an Indian cloud server, cleared the same scrutiny in one visit. The difference was not luck — it was Section 62.
| Category of taxpayer | Income threshold | Turnover / gross receipts threshold | Test period |
|---|
| Specified professionals (legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, IT, company secretary, authorised representative, film artist) | Books required once gross receipts cross the limit (no separate income test) | Gross receipts exceed ₹1,50,000 | In any of the 3 preceding tax years |
| Other business / profession (non-individual, non-HUF) | Income exceeds ₹1,20,000 | Turnover / receipts exceed ₹10,00,000 | In any of the 3 preceding tax years |
| Individuals and HUFs (other business) | Income exceeds ₹2,50,000 | Turnover / receipts exceed ₹25,00,000 | In any of the 3 preceding tax years |
| Newly set-up business/profession | Likely income exceeds the applicable limit | Likely turnover exceeds the applicable limit | In the first tax year itself |
| Retention of books | 7 tax years from the end of the relevant tax year (longer if assessment reopened) | Rule 46 |
| Penalty for default | ₹25,000 under Section 441 of the Income-tax Act, 2025 |
Related sections
Section 63 — Audit of accounts (tax audit, successor to 44AB) Section 58 — Computation of business income and deemed profits Section 61 — Presumptive taxation / deemed profits provisions Section 441 — Penalty for failure to keep books of account Rule 46 — Prescribed books, electronic backup and retention Section 44AA (1961 Act) — Old maintenance-of-books provision
Frequently asked questions
Is Section 62 the same as the old Section 44AA?
Yes. Section 62 of the Income-tax Act, 2025 replaces Section 44AA of the 1961 Act. The framework is largely the same, but the individual/HUF thresholds were updated and information technology and company secretary are now expressly listed as specified professions.
I am a freelancer earning ₹6 lakh a year. Do I have to keep books?
If your work falls in a specified profession (like IT, accountancy or technical consultancy), you must keep full books once gross receipts exceed ₹1,50,000, so yes. If it is an ordinary business run by an individual, the higher ₹2,50,000 income / ₹25,00,000 turnover limits apply instead.
How long must I keep my books of account?
Seven tax years from the end of the relevant tax year under Rule 46. If your assessment is reopened or a proceeding is pending, keep the records until that matter is finally settled.
Can I keep my accounts only on a computer or cloud?
Yes, electronic books are allowed, but they must remain accessible in India at all times and you must keep daily backups on servers physically located in India.
What is the penalty if I don't maintain books under Section 62?
A penalty of ₹25,000 can be levied under Section 441 of the Income-tax Act, 2025. Worse, the officer can estimate your income on a best-judgment basis and disallow claimed expenses.
If I opt for presumptive taxation, do I still need to maintain books under Section 62?
Generally no — validly opting for a presumptive scheme relieves you from detailed book-keeping. But if you declare income lower than the presumptive rate and your total income exceeds the basic exemption limit, the obligation to maintain books returns.
Does a doctor have any extra requirements?
Yes. In addition to the cash book, ledger and vouchers, medical professionals must maintain a daily case register of patients and an inventory of medicines and consumables under Rule 46.
C
CA Rajat Agrawal
Chartered Accountant, EaseValue · Reviewed 04 Jul 2026
This explainer is prepared and reviewed by EaseValue's tax team, based on the text of the Income-tax Act, 2025 (as amended by the Finance Act, 2026).
Disclaimer: This page explains the law in general terms for education and is not professional advice. The Income-tax Act, 2025 takes effect from 1 April 2026; provisions, thresholds and interpretations may change. Please confirm your specific position with our team before acting.
💬 Discussion & questions
0 comments · Ask anything about this — a Chartered Accountant or the community will reply.
Have a doubt about this (Section 62)? Ask here 👇
Free · takes 20 seconds · our CA answers. No account needed.
No comments yet — be the first to ask. 👆
EaseValue