Maintenance of books of accounts by Trusts: Rule 17AA

  1. Finance Act 2022 and Rule 17AA of the Income Tax Rules inserted with effect from the assessment year 2022-23 specifies the requirements for maintaining books of accounts and other documents for trusts and institutions.

 2. The notified Rule 17AA, which came into effect on 10th August 2022 outlines the form and manner in which books of account should be maintained, the place where such books should be kept, and the duration for which books of account and other documents should be preserved.  3. Section 2(12A) of the Income Tax Act defines “books of account” as including various types of books and records, whether kept in written form, electronic form, digital form, print-outs of electronically stored data, or other forms of electromagnetic data storage devices.  4. The amendment to Section 12A(1)(b) specifies that if the total income of a trust or institution, calculated without considering the exemptions under Section 10(23C) or sections 11 and 12 of the Income Tax Act, exceeds the maximum amount not chargeable to tax, that trust or institution is obligated to keep and maintain books of account and other documents.  5. Under Rule 17AA(1), organizations subject to the conditions mentioned in Section 10(23C) or Section 12A of the Income Tax Act are required to maintain specific books of account, which include: Cash book, Ledger, Journal Copies of bills and receipts, Original bills issued to individuals and receipts for payments made, Any other book required to provide an accurate view of the organization’s affairs and transactions.