Section 128 Of The Companies Act 2013: Maintenance of Books of Accounts
Tanish Karuia
December 15, 2023 at 12:11 PM
Section 128 of the Companies Act 2013 states that, (1) Every company shall prepare and keep at its registered office books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company, including that of its branch office or offices, if any, and explain the transactions effected both at the registered office and its branches and such books shall be kept on accrual basis and according to the double entry system of accounting: Provided that all or any of the books of account aforesaid and other relevant papers may be kept at such other place in India as the Board of Directors may decide and where such a decision is taken, the company shall, within seven days thereof, file with the Registrar a notice in writing giving the full address of that other place: Provided further that the company may keep such books of account or other relevant papers in electronic mode in such manner as may be prescribed.
(2) Where a company has a branch office in India or outside India, it shall be deemed to have complied with the provisions of sub-section (1), if proper books of account relating to the transactions effected at the branch office are kept at that office and proper summarised returns periodically are sent by the branch office to the company at its registered office or the other place referred to in sub-section (1).
(3) The books of account and other books and papers maintained by the company within India shall be open for inspection at the registered office of the company or at such other place in India by any director during business hours, and in the case of financial information, if any, maintained outside the country, copies of such financial information shall be maintained and produced for inspection by any director subject to such conditions as may be prescribed: Provided that the inspection in respect of any subsidiary company of the company shall be done only by the person authorised in this behalf by a resolution of the Board of Directors.
(4) Where an inspection is made under sub-section (3), the officers and other employees of the company shall give to the person making such inspection all assistance in connection with the inspection which the company may reasonably be expected to give.
(5) The books of account of every company relating to a period of not less than eight financial years immediately preceding a financial year, or where the company had been in existence for a period less than eight years, in respect of all the preceding years together with the vouchers relevant to any entry in such books of account shall be kept in good order: Provided that where an investigation has been ordered in respect of the company under Chapter XIV, the Central Government may direct that the books of account may be kept for such longer period as it may deem fit.
(6) If the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person of a company charged by the Board with the duty of complying with the provisions of this section, contravenes such provisions, such managing director, whole-time director in charge of finance, Chief Financial officer or such other person of the company shall be punishable with imprisonment for a term which may extend to one year or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees or with both.
Where Should be the Books of Account Kept?
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In What Form Shall it be Maintained?
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Applicable Rules:
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Books of Accounts in respect of Branch Office
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Accrual Basis and Double Entry System
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Inspection of Books of Accounts of a Company
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Punishment for violating provisions in Section 128 of Companies Act 2013
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FAQ’s
1. What are the books of accounts to be maintained by a company as per Section 128 co 2013?
According to Section 128(1) every company to prepare and keep the books of account and other relevant books and papers and financial statements at its registered office. However, all or any of the books of accounts may be kept at such other place in India as the Board of directors may decide.
2. What is maintenance of books of accounts?
If the sale/turnover/gross receipts from the business or profession is more than Rs. 25,00,000 or the income from business or profession is more than Rs. 2,50,000 in any of the 3 preceding years, then books of accounts will be compulsorily maintained.
3. How long should the books of accounts be maintained?
Assessees are required to preserve the specified books of account for a period of 6 years from the end of the relevant assessment year, i.e., for a total period of 8 previous years.
4. How many years books of accounts should be maintained as per Companies Act, 2013?
The company has to preserve its books of account of 8 financial years immediately preceding a financial year and in case the company had been in existence for less than 8 years, the records of all the preceding years shall be preserved.
5. How many methods are there to maintain books of accounts?
The two main accounting methods are cash accounting and accrual accounting.
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