Bookkeeping Requirements in India: What Books to Keep and for How Long

Bookkeeping isn't just good practice in India — for most businesses it's a legal requirement, under up to three different laws at once. Each has its own rules about what to keep, where, and for how long. This guide brings them together.

Companies: Section 128 of the Companies Act

Every company, whatever its size, must keep proper books of account at its registered office. The books must be kept on an accrual basis and according to the double-entry system, and must give a true and fair view of the company's affairs.

• They must record all money received and spent, all sales and purchases, and the company's assets and liabilities.
• They can be kept at another place in India if the board decides, with the ROC informed in Form AOC-5 within seven days.
• They must be preserved for at least eight years.

Electronic books

Books kept electronically must remain accessible in India at all times, and a backup must be kept on servers physically located in India, taken daily. Since April 2023, companies must also use software that records an audit trail — an edit log of every change — which can't be disabled.

LLPs

An LLP must keep books of account on a cash or accrual basis, according to double entry, at its registered office, and preserve them for eight years.

Proprietors and professionals: Section 44AA of the Income-tax Act

Under the Income-tax Act, professionals such as doctors, lawyers, engineers and Chartered Accountants, and businesses above certain income or turnover limits, must keep books of account that allow the tax officer to compute their income. Those who opt for presumptive taxation below the limits are generally relieved of this, though keeping basic records is still wise.

GST: Sections 35 and 36 of the CGST Act

Every GST-registered business must keep accounts of production or manufacture, inward and outward supplies, stock, input tax credit, and tax paid, at its principal place of business. These records must be kept for 72 months from the due date of the annual return for the year they relate to — and longer if they're involved in an appeal or proceeding.

What Good Books Contain

• A cash book and bank book, reconciled with bank statements.
• Sales and purchase registers, matching GST returns.
• Ledgers for customers, suppliers, expenses, assets and loans.
• A fixed asset register.
• Supporting vouchers: invoices, bills, receipts and contracts.

Common Mistakes

• Recording only bank transactions and missing cash or credit transactions.
• Mixing personal and business spending.
• Using spreadsheets or software without an audit trail, for a company.
• Throwing away old records before the retention period ends.

Getting Help

Think Filing keeps books for companies, LLPs and proprietors in line with all three laws, with monthly reconciliations so your records always match your returns.