Balance Sheet Mandatory for Freelancers
Yes, drafting a balance sheet mandatory for freelancers in India under certain circumstances. A balance sheet is a financial statement that provides a snapshot of a freelancer’s financial position at a specific point in time, showcasing their assets, liabilities, and owner’s equity.
Here’s an explanation with hashtags:
1. Legal Compliance:
Freelancers are required to prepare a balance sheet if their total income during a financial year exceeds the specified threshold. This is in accordance with the Income Tax Act of India.
2. Income Threshold:
Freelancers need to draft a balance sheet if their total gross receipts surpass ₹1,50,000 in any financial year.
This rule aims to ensure that individuals with substantial income maintain proper financial records.
3. Tax Audit Requirement:
If a freelancer’s gross receipts exceed ₹1,50,000, they are also subject to tax audit provisions under Section 44AB of the Income Tax Act.
This involves getting their accounts audited by a Chartered Accountant and submitting the balance sheet along with the audit report.
In summary, freelancers in India must draft a balance sheet if their total income crosses the ₹1,50,000 threshold. This is not only a legal requirement but also helps freelancers maintain accurate financial records and comply with tax audit provisions if applicable.
To visit: https://www.incometax.gov.in
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