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Rule 46Published

Rule 46: Books of account and record retention

Rule 46 prescribes books and supporting records under section 62. It includes requirements for specified professions, additional medical records, electronic access and backups, and retention after the relevant tax year.

Official notified Income-tax Rules, 2026

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Rule 46 - Maintenance of books of account under section 62

(1) Every person required to keep and maintain books of account and other documents under section 62(1)(b) shall maintain such books of account and other documents that enable the Assessing Officer to compute his total income under the Act.

(2) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or profession of authorised representative or film artist, shall keep and maintain the books of account and other documents specified in sub-rule (4).

(3) The provisions of sub-rule (2) shall not apply– (i) in relation to any tax year in the case of any person, if his total gross receipts in the profession do not exceed ₹ 150000 in any one of the three years immediately preceding the tax year; or (ii) where the profession has been newly set up in the tax year, his total gross receipts in the profession for that year are not likely to exceed the said amount.

(4) The books of account and other documents referred to in sub-rule (2) shall be the following:— (a) a cash book; or (b) a journal, if the accounts are maintained according to the mercantile system of accounting; or (c) a ledger; or (d) for sums equal to or exceeding two hundred and fifty rupees, copies of bills or receipts issued by him; or (e) original bills and receipts in respect of expenditure equal to or exceeding two hundred and fifty rupees incurred by the person and issued to him; or (f) payment vouchers prepared and signed by the person, where the expenditure incurred does not exceed two hundred and fifty rupees, and the cash book maintained by the person does not contain adequate particulars in respect of such expenditure;

(5) In this rule,— (a) "authorised representative" means a person who represents any other person, on payment of any fee or remuneration before– (i) any Tribunal; or (ii) any authority constituted or appointed by or under any law for the time being in force; but does not include an employee of the person so represented or a person carrying on legal profession or a person carrying on the profession of accountancy; (b) "cash book" means a record of all cash receipts and payments, kept and maintained day-to-day and giving the cash balance in hand at the end of each day or at the end of a specified period not exceeding a month; (c) "film artist" means any person engaged in his professional capacity in the production of a cinematograph film whether produced by him or by any other person, as— (i) an actor; or (ii) a cameraman; or (iii) a director, including an assistant director; or (iv) a music director, including an assistant music director; or (v) an art director, including an assistant art director; or (vi) a dance director, including an assistant dance director; or (vii) an editor; or (viii) a singer; or (ix) a lyricist; or (x) a story writer; or (xi) a screen-play writer; or (xii) a dialogue writer; or (xiii) a dress designer.

(6) A person carrying on medical profession shall, in addition to the books of account and other documents specified in sub-rule (4), keep and maintain the following:— (i) a daily case register in Form No. 25; (ii) 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 purpose of his profession;

(7) The books of account and other documents specified in sub-rules (1), (4) and (6) other than those relating to a tax year which has come to an end shall be kept and maintained by the person at– (a) the place where he is carrying on the profession; or (b) where the profession is carried on in more places than one, at the principal place of his profession; or (c) if the person keeps and maintains separate books of account in respect of each place where the profession is carried on, such books of account and other documents may be kept and maintained at the respective places at which the profession is carried on.

(8) The books of account and other documents specified in sub-rules (1), (4) and (6) maintained in electronic mode shall remain accessible in India at all times, and the backup 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.

(9) The books of account and other documents specified in sub-rules (1), (4) and (6) shall be kept and maintained for a period of seven tax years from the end of the relevant tax year.

(10) Where the assessment in relation to any tax year has been reopened under section 279 or under section 147 of the Income-tax Act, 1961 (43 of 1961), as it existed prior to its repeal, all the books of account and other documents which were kept and maintained at the time of reopening of the assessment shall continue to be so kept and maintained till the assessment, so reopened has been completed.

Rule breakdown

Start with the applicable section 62 obligation

A person required to maintain books and other documents under section 62(1)(b) must keep records that enable the Assessing Officer to compute total income. This functional obligation appears separately from the prescribed-profession list.

Identify the applicable Act requirement first. An exception to a particular prescribed-book requirement should not be treated as a general exemption from every record-keeping obligation.

Check the specified profession and receipts condition

Sub-rule (2) lists legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration, authorised representation and film-artist professions. The last two terms are separately defined.

Sub-rule (3) qualifies sub-rule (2): it refers to gross professional receipts not exceeding ₹1,50,000 in any one of the three immediately preceding years, and separately to a newly established profession whose receipts for the year are not likely to exceed that amount. Keep the relevant receipts history or new-profession estimate and apply the exact wording to the facts.

Maintain the prescribed records and transaction evidence

Sub-rule (4) sets out a cash book, a journal for mercantile accounting, a ledger, copies of issued bills or receipts, original expenditure documents and the specified payment vouchers. The bill and receipt provisions use ₹250 thresholds, with a voucher condition where the cash book lacks adequate particulars.

Read the exact clauses when deciding what supporting document is required. Retain enough detail to reconcile receipts, expenses and the tax computation instead of treating a bank statement alone as a complete accounting system.

Additional records for medical practice

A person carrying on the medical profession must also keep a daily case register in Form No. 25 and opening and closing inventories under broad heads for drugs, medicines and consumable accessories used in the profession.

Reconcile inventory movements and professional receipts with the underlying records. The daily case register is a distinct requirement and should not be replaced by a year-end summary.

Keep current records at the stated place

For records other than those relating to a tax year that has ended, the rule identifies the place of profession, the principal place if there are several, or the respective places where separate books are maintained.

Document how records for different branches are maintained and made available. The rule separately deals with electronic access and backups.

Electronic records and India-based daily backups

Electronic books and documents must remain accessible in India at all times. Their backups must be kept daily on servers physically located in India.

Review the actual storage and backup arrangement, restore process and service-provider location evidence. Mere access to an overseas cloud dashboard does not establish that the required daily backup is on a server physically in India.

Retain records and respond to reopening

The prescribed books and documents must be retained for seven tax years from the end of the relevant tax year. Where an assessment is reopened under section 279 or the specified former section 147, records held at reopening must continue to be kept until that assessment is completed.

Use both the ordinary retention schedule and any reopening hold. Do not destroy relevant records simply because the standard period has elapsed while the reopened assessment remains incomplete.

Key takeaways

Applicable obligation first

Check section 62 and the exact profession and receipts provisions.

Medical additions

Form 25 and opening/closing consumable inventories are separately required.

Electronic access and backup

Records must remain accessible in India, with daily backups on India-located servers.

Retention and reopening

Seven-tax-year retention is supplemented by the reopening rule.

Practical checklist

  • Identify the relevant section 62 and professional-record obligations.
  • Retain invoices, receipts and required vouchers with the books.
  • Check daily backup operation and the physical server location.
  • Apply a reopening hold to relevant records.

Avoid

  • Do not assume the professional receipts clause removes every statutory record obligation.
  • Do not confuse online access with compliant India-based backup storage.

FAQs

Does the rule only require seven years of bank statements?

No. It addresses books and supporting documents, prescribed professional records, medical additions and the functional ability to compute total income.

Are electronic records allowed?

The rule expressly addresses them, requiring access in India at all times and daily backups on servers physically located in India.

What additional register is prescribed for medical practitioners?

A daily case register in Form No. 25, together with the stated opening and closing inventory records.

Can records be destroyed during a reopened assessment after the normal retention period?

Records held when the assessment is reopened must continue to be maintained until that reopened assessment is completed.

Glossary

Cash book
The defined day-to-day record of cash receipts and payments with cash balance at the end of each day or a specified period no longer than one month.
Form 25
The daily case register prescribed for medical professionals.
Reopening hold
Continued retention of records held at assessment reopening until the reopened assessment is completed.

Official sources