Books of Account explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Maintaining proper books of account and statutory registers is a fundamental compliance obligation under the Companies Act 2013. These records ensure transparency, accountability, and provide an audit trail for corporate transactions.
Books of Account: Section 128
Every company must prepare and keep books of account and financial statements at its registered office (or such other place in India as the Board may decide) containing a record of:
- All sums of money received and expended
- All sales and purchases of goods and services
- Assets and liabilities of the company
- Items of cost as may be prescribed for companies engaged in production/processing/manufacture
Requirements for Books of Account
| Requirement | Provision |
|---|---|
| Double-entry system | Accrual basis, double-entry system required |
| Preservation period | 8 years from end of financial year (or from date of completion if pending litigation) |
| Place of maintenance | Registered office (or any other place in India notified to ROC in Form AOC-5) |
| Branch accounts | Branch books may be maintained at branch; summaries sent to registered office every 15 days |
| Electronic records | Permitted if accessible and retrievable easily |
Mandatory Statutory Registers
Companies must maintain the following statutory registers:
| Register | Section | Form |
|---|---|---|
| Register of Members | Section 88 | MGT-1 |
| Register of Debenture Holders | Section 88 | MGT-2 |
| Register of Directors and KMP | Section 170 | MBP-4 |
| Register of Charges | Section 85 | CHG-7 |
| Register of Contracts (with related parties) | Section 189 | MBP-4 |
| Register of Loans, Guarantees and Investments | Section 186(9) | MBP-2 |
| Register of SBOs (Significant Beneficial Owners) | Section 90 | BEN-3 |
| Register of Director's Shareholding | Section 170 | MBP-4 |
Register of Members: Key Requirements
The Register of Members is the most important statutory register. It must contain:
- Names and addresses of members with nature of membership
- Date of entry as member and cessation
- Number and amount of shares held
- Amount paid/agreed to be paid on shares
- Distinctive numbers of shares (for physical shares)
- PAN, email, and Aadhaar (for digital records)
For listed companies, the Register of Members is maintained by the Registrar and Transfer Agent (RTA), which also maintains the demat account records through NSDL/CDSL.
Inspection Rights
| Register | Right of Inspection | Charges |
|---|---|---|
| Register of Members | Members: free; Others: fee | Rs.5 per page |
| Register of Charges | Any person: free | Nil |
| Register of Directors | Members: free | Nil |
| Register of Contracts | Members: free | Nil |
Digitization of Registers
Companies may maintain registers in electronic form complying with Rule 27 of Companies (Management and Administration) Rules 2014. Key requirements:
- Data must be backed up regularly
- Adequate security systems in place
- Accessible for inspection at registered office
- Printed copy to be made available on demand
- For listed companies, software must be compatible with RTA systems
Penalties for Non-Maintenance
Failure to maintain required registers and books of account attracts penalties under various sections:
- Section 128: Company fined Rs.5 lakh to Rs.25 lakh; MD/CFO/officer in charge fined Rs.1 lakh to Rs.5 lakh
- Section 88 (Register of Members): Fine Rs.50,000 to Rs.3 lakh; each officer Rs.10,000 to Rs.1 lakh
- Section 189 (Register of Contracts): Company officer fine Rs.25,000 to Rs.1 lakh
Key Facts About Books of Account
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
For how many years must books of account be preserved?
Books of account and financial records must be preserved for 8 years from the end of the financial year to which they relate. Where any investigation is pending, records must be kept until the investigation is concluded.
Can books of account be maintained electronically?
Yes, books of account can be maintained in electronic form. They must be backed up regularly, have adequate security measures, be accessible for inspection at the registered office, and printed copies must be provided on demand.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Books of Account: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.