Maintaining Book of Accounts for Company - Companies Act

All companies incorporated in India are required to mandatorily maintain book of accounts under the Companies Act, 2013. In addition, the Companies Act, a company registered in India will also be mandated by the 1. In this article, we look at maintaining book of accounts for a company, as per Companies Act, 2013.

Books of Accounts

Books of Accounts includes records maintained in respect of:

Sum or money received and expended and matters in relation to which the receipt and expenditure take place
Sales and purchase of goods and service
Assets and liabilities
Item of cost as prescribed u/ s 148 [2( 12)].

“Books and Paper” include books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form.

Place for Maintaining Book of Accounts of Company

The book of accounts has to be maintained at the

registered office of a company. However, after providing intimation to the Registrar of Companies, the Board of Directors could decide to keep or maintain book of accounts at any other location suitable to the business.

Maintaining Book of Accounts of Company - Online

A company can

maintain its books of accounts online or in an electronic form subject to the following conditions:

The electronic records must be accessible in India.
Information should retain the format in which it is generated and should remain complete and unaltered
Information provided by branch should not be altered
Electronic records should be capable of being displayed in legible form
Backup shall be kept in server located in India
The company should intimate ROC on annual basis with relevant information related to the service provider.

Maintaining Records of Branch Office

In case a company has more than one office, the main book of accounts of the company must be maintained at the registered office. In addition, a records of transaction effected at its branch, should be kept at branch office itself. A regular summary report must be sent to registered office and it should be be kept open to inspection by the Directors.

Inspection of Book of Accounts

The Board of Directors of the company have rights to inspect the book of accounts and other books and papers of a company. However, in case of inspection of records of a subsidiary company, it can be done only by a person authorised by the Board of Directors.

Time Limit for Maintaining Book of Accounts

Books of accounts of a company must be maintained and preserved for a period not less than 8 years immediately preceding a financial year. The following persons in a company will be responsible for maintaining book of accounts:

Managing Director
Whole Time Director, in charge of Finance
Chief Financial Officer
Any other person charged by Board of Directors

Failure to maintain book of accounts of a company as per the provisions detailed above can attract a penalty of upto Rs.5 lakhs of imprisonment of upto 1 year.

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Frequently Asked Questions

Common questions about Maintaining Company Book of Accounts India.

A book of accounts is a record of all financial transactions, including money received and expended, sales and purchases, assets and liabilities, and cost items. According to the Companies Act, 2013 and the Income Tax Act, it is mandatory for all companies incorporated in India to maintain books of accounts.

The books of accounts must be maintained at the registered office of the company. However, the Board of Directors can decide to keep the books at another location suitable for the business after intimating the Registrar of Companies.

Yes, a company can maintain its books of accounts online or in electronic form, provided certain conditions are met, such as ensuring the electronic records are accessible in India, retaining the original format, and keeping a backup server in India.

The books of accounts of a company must be maintained and preserved for a period of not less than 8 years immediately preceding a financial year.

The Managing Director, Whole-Time Director in charge of Finance, Chief Financial Officer, or any other person charged by the Board of Directors are responsible for maintaining the books of accounts in a company.

Failure to maintain books of accounts of a company as per the provisions of the Companies Act, 2013 can attract a penalty of up to Rs. 5 lakhs or imprisonment of up to 1 year.

If a company has more than one office, the main books of accounts must be maintained at the registered office. Additionally, records of transactions effected at each branch should be kept at the respective branch offices, and regular summary reports should be sent to the registered office.

The Board of Directors of the company has the right to inspect the books of accounts and other books and papers of the company. In case of a subsidiary company, inspection can be done only by a person authorized by the Board of Directors.

According to the Companies Act, 2013, "books and papers" include books of account, deeds, vouchers, writings, documents, minutes, and registers maintained on paper or in electronic form.

Yes, there are specific conditions for maintaining books of accounts online or in electronic form, such as ensuring the electronic records are accessible in India, retaining the original format, keeping a backup server in India, and intimating the Registrar of Companies annually with relevant information related to the service provider.