Section 128 of Companies Act, 2013 states the requirement of maintenance of books of accounts under Companies Act, 2013 for the registered Company in India.
Books of Accounts means the documentation of financial position of the business. All financial transactions are recorded in it. It is usually maintained at a prescribed place of business as per the different Acts. Generally, it is the responsibility of the owner to record proper information.
It mainly includes-
- Journal
- Ledgers
- Trading Account
- Profit and Loss Account
- Balance Sheet
- Notes to Accounts
- Cash flow Statements
In India, a business entity needs to maintain BOOKS OF ACCOUNTS under-
- The Company Law, 2013
- Income Tax Act, 1961
- Goods And Service Tax Act, 2017
THE COMPANIES ACT, 2013
Who has to maintain Books of Accounts?
As per Companies Act, 2013 every company needs to maintain the books of accounts. As per the section 128 every company must prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year.
The Act recognizes the fact that books of accounts may be kept either in physical or electronic form.
The books of account and other relevant books and papers referred to above shall be retained completely in the format in which they were originally generated, sent or received.
Read Also: Income Tax Rate For AY- 2020-2021/ FY- 2019-2020
What books of Accounts are required to be maintained by Companies?
Books of Account, other relevant books and papers and financial statement for every financial year should be maintained by companies, including of its branches (if any).
Books of Accounts includes-
- Cash flow statement (all sums of money received and expended by a Company and matters in relation to which the receipts and expenditure take place)
- Records of sales and purchases of goods or services,
- Records of assets and liabilities of Company
- Items of cost
- Deeds, vouchers, writing, documents, minutes, and registers whether in physical or electronic mode
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How many years books of Accounts should be maintained by a company?
The record of a Financial year shall be maintained by company for atleast 8 succeeding years. For example, books of accounts for FY 2019-20 should by maintained by company atleast upto FY 2027-28.
Penalty for non-maintenance of books of accounts under Companies Act, 2013
If books of accounts are not maintained by the company, then the person-in-charge shall be held punishable with the following:
- A minimum penalty of Rs. 50,000 which may extend to Rs. 5 lakhs; or
- Imprisonment for a specific period/term which may extend to one year; or
- With both of the above punishment, i.e., both fine as well as imprisonment.
Read more:
- Mandatory books of Accounts under Income Tax Act, 1961-Section 44AA
- Mandatory maintenance of Accounts under GST Law
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The author of the above article is Aditya Kishore.
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