Books of Accounts are required to be maintained mandatorily in several cases viz, if you a company registered under companies act or you are assessee that is not assessed under presumptive method of Income tax etc. Hence one must be categorically aware how long you are required to hold to books of accounts under Companies Act, Income Tax & GST Act.

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Relevant Law Applicable

Section 128 of Companies Act, 2013 | Section 35 of the Central Goods and Services Tax (CGST) Act, 2017 | Section 44AA of Income Tax Act 1961

What is the duration of retaining books of account?

Companies Act – Not less than eight financial years immediately preceding a financial year

(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).

GST – Until the expiry of 72 months from the due date of furnishing of annual return for the year pertaining to such account and records.

(Provided for a longer period in case of appeals or investigations).

Income Tax Act – Books should be maintained for a period of 6 years from the end of the relevant assessment year.

What is penalty Applicable?

Companies Act – Defaulter will 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.

GST – As per section 122(1) of CGST Act 2017, if a person fails to keep, maintain or retain books of account shall be liable for a penalty of Rs 10,000 which may extend to Rs 25,000.

Income Tax – As per Section 271A of Income Tax Act, if any person fails to keep and maintain any such books of account, the Assessing Officer or the Commissioner may direct that such person shall pay a sum of twenty-five thousand rupees.

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