Section 128 of the Companies Act, 2013 requires every company in India to maintain proper books of account on an accrual basis using double-entry bookkeeping. This includes the cash book, journal, ledgers, purchase and sales records, invoices, vouchers and bank statements.
These records must give a true and fair view of financial affairs and be preserved for at least eight years. Directors and key management are personally responsible for compliance, with penalties for failure including fines and imprisonment.
Financial statements required under Section 129
At the end of each financial year (FY), a company must prepare financial statements that include all of the following:
- Balance sheet
- Statement of profit and loss (or income and expenditure account for non-profit companies)
- Cash flow statement (not required for small companies or one-person companies)
- Statement of changes in equity (where applicable)
- Notes to accounts
These statements must conform to the accounting standards notified under Section 133 of the Companies Act, 2013, and, in the case of listed companies, comply with Indian Accounting Standards (Ind AS) as specified by the Ministry of Corporate Affairs (MCA).
Statutory registers that every company must maintain
These are administrative in nature but must be kept alongside accounting records. The key registers include:
- Register of members: Records shareholder details, number of shares held and transfer history.
- Register of directors and key managerial personnel: Maintains details of all directors and their shareholdings.
- Register of charges: Records all charges created on the company’s assets.
- Register of contracts and arrangements: Records related-party transactions in which directors have an interest.
- Minutes of board meetings and general meetings: Minutes must be prepared within 30 days of the meeting and are permanent records.
Where and how records must be kept
Books of account must be kept at the company’s registered office. A company that maintains records at a branch office must ensure that a summarised return from each branch is sent to the registered office within 15 days at the end of every quarter. Companies may keep books in electronic form, provided that:
- The books remain accessible from India at all times.
- A backup of the data is stored on servers physically located in India.
- The books can be produced on request by an authorised officer or auditor.
The MCA issued rules in 2014 specifying the technical requirements for maintaining accounts electronically, including backup obligations. Companies that use cloud-based or offshore servers without maintaining a local backup are in non-compliance.
Conclusion
Accounting compliance under the Companies Act, 2013 is not a back-office formality. It is a legally enforceable obligation with personal liability attached to directors and key managerial personnel. Maintaining books on an accrual basis, preparing complete financial statements, keeping statutory registers up to date and retaining all records for at least eight years are the minimum standards every registered company must consistently uphold to stay compliant and audit-ready.
Strong accounting discipline isn’t just about avoiding penalties; it directly drives transparency, credibility and smoother audits, especially as a business scales.
TallyPrime supports this compliance journey by helping businesses maintain accurate books, generate statutory-ready financial statements and manage records in a structured system built for reliability and audit readiness.
