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CA Intermediate · Corporate and Other Laws · Accounts of Companies

Mahadev Foods Ltd was incorporated on 1 July 2022. Its directors want to understand for how long the company must preserve its books of account, together with the vouchers relating to them. What is the minimum period prescribed by the Companies Act, 2013 for a company that has existed for the entire period in question?

A company must keep its books of account and related vouchers in good order for at least eight financial years immediately preceding the current financial year, or for the period since incorporation if that is shorter. Permanent retention is not required unless an investigation or proceeding requires it.

  1. ANot less than eight financial years immediately preceding the current financial yearCorrect
  2. BNot less than five financial years immediately preceding the current financial year
  3. CNot less than ten financial years immediately preceding the current financial year
  4. DPermanently, without any time limit

Explanation

The Act requires books of account and other relevant papers to be kept in good order for not less than eight financial years immediately preceding the current financial year (or from incorporation, if shorter). Five or ten years are not the statutory period. Permanent retention is not required, though if an investigation or inquiry is ordered, the books must be kept until it is concluded.

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