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 Income Tax Act to maintain records. 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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