Six years mandatory period for maintaining record under income from business

Six years mandatory period for maintaining record under income from business

The Federal Board of Revenue (FBR) has introduced updated regulations pertaining to six years maintaining books of accounts, documents, and records for taxpayers deriving income from business.

The amendments, aimed at enhancing transparency and accountability, emphasize the importance of maintaining comprehensive financial records. Here’s an overview of the key provisions outlined in the updated rules:

1. Proper Books of Account:

• Taxpayers deriving income chargeable under the head “Income from Business” are now mandated to maintain proper books of account, documents, and records. The records should cover various aspects, including:

• Sums of money received and expended, specifying the nature of transactions.

• Details of all sales and purchases of goods and services.

• Comprehensive records of the taxpayer’s assets and liabilities.

• For taxpayers engaged in assembly, production, processing, manufacturing, mining, or similar activities, detailed records of all costs related to material utilization, labor, and other inputs.

2. Use of Electronic Cash Register or Accounting Software:

• Taxpayers utilizing fiscal electronic cash registers or computerized accounting software are permitted to issue cash memos, invoices, or receipts generated by these electronic systems.

3. Retention of Duplicate Copies and Electronic Records:

• Duplicate copies and electronic or computer records of cash memos, invoices, receipts, and patient-slips generated under these rules are required to be retained by the taxpayer. These duplicates form an integral part of the overall records to be maintained.

4. Duration of Record Maintenance:

• Taxpayers must maintain the books of account, documents, and records for a minimum of six years after the conclusion of the tax year to which they pertain. This ensures a comprehensive historical record of financial transactions.

5. Exception for Pending Proceedings:

• The six-year record maintenance requirement does not apply if any proceeding under the Ordinance is pending before any authority or court. In such cases, taxpayers are obligated to maintain records until the final decision of the proceedings.

These updated regulations underscore the FBR’s commitment to promoting financial transparency and ensuring accurate reporting of business income. By mandating the meticulous recording of financial transactions, the FBR aims to streamline the audit process, discourage tax evasion, and facilitate a fair assessment of taxable income.

Businesses and taxpayers are advised to familiarize themselves with these updated rules and incorporate necessary measures to comply with the new record-keeping requirements. Adhering to these guidelines not only ensures compliance with tax regulations but also contributes to the establishment of a robust financial ecosystem, benefiting both taxpayers and regulatory authorities alike.