Maintenance of Books of Accounts

Maintenance of Books of Accounts

A variety of statutory laws, including the Income Tax Act, the Companies Act of 2013, and the GST Act, require that books of accounts, including vouchers and receipts, be kept. Under each of the three laws, there are different requirements for mandatory books, retention periods, and compulsion.

Maintenance of Books of Accounts under Income Tax Act

If the sale, turnover, or gross receipts from the business or profession exceeded Rs. 25,00,000 in any of the three years prior, or if the income from the business or profession exceeded Rs. 2,50,000, books of accounts must be kept.

The following professions are covered by this clause:

  • Accountancy
  • Technical consultancy
  • Interior decoration
  • Authorized Representative
  • Engineering
  • Architectural
  • Film artist
  • Company secretary
  • Legal
  • Medical

Therefore, those in the aforementioned professions must keep books of accounts if they earned more than Rs. 2,50,000 in any of the three years prior. If the expected income for a new profession is greater than Rs. 2,50,000, the professionals should keep the books of accounts

Books of accounts as per Rule 6f

Books of accounts to be maintained as per the rule:

  • Cash Book
  • Journal
  • Ledgers
  • Copies of bills or receipts
  • Daily cash register with details of patients, services provided, fees received and date of receipt (persons carrying on medical profession)
  • Details of stock of drugs, medicines, and other consumables used (persons practicing on medical profession)

Additionally, books must be kept if the income was less than Rs. 2,50,000 in any of the three years prior or in the case of new profession, it is not anticipated to be more than Rs. 2,50,000. However, since no specific books have been mentioned in this situation, any books that are kept should be organized so that the ATO can determine the income. Six years after the end of the applicable year, books must be preserved.

Maintenance of Books of Accounts under Companies Act

All companies are required to keep books of accounts at their registered office or any other location that the board of directors deems appropriate. A company must inform RoC if its books are kept somewhere other than its registered office. The business has the option of keeping its accounts electronically.

After the end of the relevant financial year, books must be kept for a minimum of 8 years.

Books of accounts to be maintained:

  • Cash flow statement
  • Books of sales and purchases
  • Books of assets and liabilities
  • Items of cost
  • Deeds, vouchers, documents, minutes, and registers whether in physical or electronic mode

Maintenance of Books of Accounts Under GST Act

Every registered individual is required to keep GST records at their principal place of business.

  • Records to be maintained
  • Production or manufacture of goods
  • Inward supply
  • Outward supply
  • Stock of goods
  • Input tax credit availed
  • Output tax payable and paid and
  • Other particulars as may be prescribed

Duration for which the books need to be kept After the annual return was last filed (on December 31, that year), books and records must be kept for six years.


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