Akshay Kshirsagar


Section 44AA of Income Tax Act - Maintenance of Books of Accounts

By CA Priyanka Jain on updated 27th November 2022 4.38pm 

What is Section 44AA ?

The provision under section 44AA is compulsory maintenance of books of accounts by certain persons carrying business or profession if the gross receipts are more than Rs.1,50,000 in 3 preceding years for an existing profession. This also applies to a newly set up profession whose gross receipts are expected to be more than Rs. 1,50,000.

Who is required to maintain books of account?

Specified profession

Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act.

 Type 1. Persons carrying on a specified profession whose gross receipt in the profession does not exceed Rs. 1,50,000 in any of three years immediately preceding the previous year (Board has not prescribed books of accounts falling under this type).


Non-Specified profession

A non-specified profession is a profession other than a specified profession mentioned above.

Tax Exemption for Startup India.

80 IAC Exemption

After getting recognition certificate startup entity may apply for tax exemption on profit earned under 80 IAC deduction. However, MAT and AMT will be applicable for companies and LLP’s even after claiming 80 IAC. To claim deduction 80 IAC entity should be

 1. A recognized Startup.

 2. Should be Limited Liability Partnership or Private limited.

 3. Should have been incorporated after 1st April 2016.

 4. Total turnover of its business does not exceed twenty-five crore rupees in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021. 

The Startup incorporated between April 1, 2016, till 31st March 2022 are eligible for this scheme. Budget 2021 has extended the eligibility to 31st March 2022.  Such startups will be eligible for any three consecutive assessment years out of five years beginning from the year in which the eligible start-up is incorporated. 

54EE Exemption

A new section 54 EE has been inserted in the Income Tax Act for the eligible startups to exempt their tax on a long-term capital gain or any such a long-term capital gain as notified by government. But investment in the long term specified asset, during any financial year, should not exceed  INR 50 Lakhs.

And there is a lock-in period of three years on the amount invested into the long term specified asset. So, assessee cannot transfer or convert the long term specified asset for a period of three years.

Registration Process

You must first incorporate or register your business as Limited Liability Partnership, Partnership or Private Limited Company.


Post incorporation registration visit startup India website. Fill-up the form with details of your business. Enter the one time password which is sent to your e-mail and other details like, startup as the type of user, name and stage of the startup, etc. After entering these details, the Startup India profile is created. 


Documents for Registration

 1. Incorporation Certificate.

 2. Details of Director.

 3. Proof of startup and innovation through website.

 4. PAN.

 5. Patent or trademark details.


Recognition Certificate

The next step after creating the profile on the Startup India Website entity will receive recognition certificate as below.

Department for Promotion of Industry and Internal Trade (DPIIT) Recognition.

This recognition helps the startups to avail benefits like access to high-quality intellectual property services and resources, relaxation in public procurement norms, self-certification under labour and environment laws, easy winding of company, access to Fund of Funds, tax exemption for 3 consecutive years and tax exemption on investment above fair market value.

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