{"id":21214,"date":"2019-07-02T19:30:26","date_gmt":"2019-07-02T14:00:26","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=21214"},"modified":"2022-09-05T16:48:14","modified_gmt":"2022-09-05T11:18:14","slug":"books-of-accounts-under-companies-act","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/books-of-accounts-under-companies-act\/","title":{"rendered":"Maintenance of Books of Accounts: Section 128 of the Companies Act, 2013"},"content":{"rendered":"

M<\/strong>Maintenance\nof Books of Accounts is one of the mandatory compliances that every company\nneeds to follow. Whether it’s a private limited, public limited, OPC, or LLP,\neach of these entities requires obeying Section 128 of Companies Act, 2013\nmandatorily. <\/p>\n\n\n\n

Earlier, Section 209 of the Companies Act, 1956<\/strong>[1]<\/strong><\/a><\/sup> dealt with the maintenance of books of accounts of the company. It was crucial to keep the records so that one can get a true and accurate view of the company’s state of affairs or branch office. <\/p>\n\n\n\n

Furthermore, maintaining the books of accounts was necessary to get a correct summary of the transactions made by the company. Besides, it also specifies the period for which the company has kept the record and the place of keeping. <\/p>\n\n\n\n

Hence,\nin this blog, we are going to get an overview of what Section 128 of the\nCompanies Act, 2013 explains. <\/p>\n\n\n\n

Maintenance of Books of Accounts<\/h2>\n\n\n\n

Maintenance of Books of Accounts refers to the records that company has to maintain to keep the details of the specified financial transaction. <\/p>\n\n\n\n

Section 128 of the Companies Act, 2013 specifies the following key features related to the proper books of account as under: <\/p>\n\n\n\n

  1. The company needs to maintain the books of account w.r.t. items specified in clauses (i) to (iv) of sub-section 2(13) of the Companies Act, 2013 hereinafter referred as Act, which defines ‘books of account.’<\/li>
  2. The books of accounts should mandatorily display all money expended and received, purchases and sales of goods, and the assets and liabilities of the company.<\/li>
  3. Books of account are required to be kept on an accrual basis<\/a> and as based on the double entry system of accounting<\/a>. <\/li>
  4. It must represent a true and fair view of the company’s state of the affairs or its branches. <\/li><\/ol>\n\n\n\n

    Where should be the Books of Account kept?<\/h2>\n\n\n\n

    As per Section 128(1), every company must prepare and keep its books of accounts and other relevant books, financial statements, and papers at its registered office. <\/p>\n\n\n\n

    However,\nthe place of keeping any or all of the aforesaid books could change at such\nother place in India as decided by the Board of Directors. <\/p>\n\n\n\n

    In case the place changes, the company needs to intimate such decision with the ROC within seven days. This must be in the form of a notice which needs to be in the writing form consisting of the full address of the decided place. <\/p>\n\n\n\n

    In\nwhat form shall it be maintained?<\/h2>\n\n\n\n

    As\nper the second proviso of Section 128(1), all the companies may keep its books\nof account or other such relevant paper and books in electronic mode or as may\nbe prescribed. <\/p>\n\n\n\n

    Such\nbooks of accounts shall remain accessible in India so that it can be used for\nsubsequent use (the Companies (Accounts) Rules, 2014 hereinafter referred in\nthis Chapter as Rule) (Rule 3(1)). <\/p>\n\n\n\n

    Therefore,\nthe books of account along with other relevant papers and books maintained in\nelectronic mode:<\/p>\n\n\n\n