Bookkeeping Mandatory for Organizations
Yes, bookkeeping is mandatory for organizations, charitable, and social service entities in India.
Proper bookkeeping involves maintaining accurate and organized records of financial transactions, income, expenses, assets, and liabilities.
It helps ensure transparency, accountability, and compliance with legal and taxation requirements.
◘ Legal Compliance:
The Income Tax Act, 1961, and the Companies Act, 2013 (if applicable), mandate all organizations, including charitable and social service entities, to maintain proper books of accounts.
These laws specify the formats, standards, and regulations for bookkeeping and financial reporting.
◘ Threshold and Starting Point:
There isn’t a specific income threshold that dictates when organizations, charitable, and social service entities need to start bookkeeping.
From the moment these entities commence their activities, they should maintain proper records.
Even if an organization’s income is below taxable limits, maintaining accurate books of accounts is essential for demonstrating the appropriate utilization of funds, supporting funding applications, and ensuring transparency to stakeholders.
Benefits of Proper Bookkeeping:
• Transparency and Accountability:
Proper bookkeeping provides transparency in financial operations, allowing stakeholders to see how funds are received, spent, and utilized for charitable or social service activities.
• Compliance:
Accurate bookkeeping ensures compliance with statutory requirements, reducing the risk of penalties or legal issues.
• Tax Benefits:
Maintaining proper records enables organizations to claim tax exemptions and deductions available for charitable activities.
• Credibility:
Well-maintained books of accounts enhance an organization’s credibility and reputation, making it easier to attract donors, partners, and grants.
• Decision-making:
Access to financial data helps organizations make informed decisions regarding resource allocation, project planning, and future initiatives.
Irrespective of income levels, organizations, charitable, and social service entities in India are mandated to maintain proper bookkeeping as per legal requirements. This practice not only ensures compliance but also supports transparency, credibility, and effective management of resources. Bookkeeping and Financials Transparency
To visit: https://www.mca.gov.in/
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