Sub-section (1) of section 128 of the Act enables the preparation and keeping of Books of Account, books and papers, financial statement in electronic mode. A company may keep books of account in electronic mode in such manner as may be prescribed.
The provision requires a company or branch office to provide a fair and accurate representation of its financial status, transactions, and operations through the maintenance of its books of accounts. The responsibility for keeping these books and the requirement to specify the location where they will be stored, as well as the period of time they must be kept, are also established by this provision.
Sl. No | Particulars | Details |
1 | Books of Accounts | Books of Accounts includes- 1. Cash flow statement. 2. Sales & Purchases Registered. 3. Assets & Liabilities of Company 4. Items of cost 5. Deeds, vouchers, documents, register, and minutes whether in physical or digital format. |
2 | Place for Maintaining Book of Accounts | The book of accounts is typically kept at the registered office of a company. However, the Board of Directors may decide to maintain the books at a different location that is more suitable for the company's operations, after informing the Registrar of Companies of this change. |
3 | Books of Accounts are maintaining electronically | The Companies (Accounts) Rules, 2014 permit the maintenance of books of accounts and other relevant books or papers in electronic form, and this is an optional choice. The electronic books or papers must be accessible in India, so that they can be used in the future. |
4 | Maintaining Books of Account of Branch Office | According to the Companies (Accounts) Rules, 2014, every company with a branch office in India or abroad must maintain proper books of accounts at the branch office for all transactions carried out there. Additionally, the branch office must periodically send summarized returns to the registered office or to the location where the books of accounts are kept. |
5 | Inspection of Book of Accounts | As per the Companies (Accounts) Rules, 2014, the company must keep its books of accounts and other relevant books and papers available for inspection at its registered office or another location in India during business hours, including financial information kept outside India. The inspection of the subsidiary of the company can only be conducted by a person who has been authorized by the Board of Directors through a resolution. |
6 | Time Limit for for Maintaining | According to the Companies (Accounts) Rules, 2014, the company must keep its books of accounts for the immediately preceding 8 financial years and, if it has been in existence for less than 8 years, all records from its inception must be preserved. |
7 | Responsibility | The individuals responsible for ensuring the company's compliance with the requirement to maintain books of accounts and other records are as follows: |
8 | Penalty fo Non-Maintenance Of Books Of Accounts | Under the Companies Act, failure to maintain proper books of accounts can result in penalties. Section 134 of the Act specifies the penalty for not keeping or not producing books of accounts, and the amount of penalty may vary from INR 50,000 to INR 5,00,000 depending on the circumstances. Further, if the violation is a continuing one, an additional fine of INR 1,000 per day can be imposed until the violation is rectified. Additionally, directors or officers who are responsible for the violation may also face fines or even imprisonment, as specified under Section 448 of the Act. |
| The individuals responsible for maintaining the books of accounts include: | ||||||
| 1. The Managing Director | ||||||
| 2. Whole-Time Director in charge of finance | ||||||
| 3. Chief Financial Officer | ||||||
| 4. Any other person designated by the Board with the responsibility of adhering to the provisions of the Companies Act, 2013. |
