Who is required to maintain books
Three obligations run in parallel and they do not have the same trigger.
| Law | Who it binds |
|---|---|
| Income-tax, Section 44AA | Individuals and HUFs where income exceeds ₹2,50,000 or turnover or gross receipts exceed ₹25,00,000 in any of the three preceding years; for other persons, ₹1,20,000 and ₹10,00,000. Specified professions are covered separately, with books prescribed by Rule 6F |
| Companies Act, Section 128 | Every company, regardless of turnover or activity — including a dormant one |
| GST, Section 35 with Rule 56 | Every registered person, covering inward and outward supplies, stock, input tax credit and output tax, at each place of business |
The consequence people miss is that these do not switch on together. A small trader can be below the Section 44AA threshold and still be fully obliged under GST because they are registered. A dormant company with no transactions still has to maintain books. Being outside one requirement says nothing about the other two.
Specified professions — legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration and others notified — are governed by Rule 6F, which prescribes the actual records: cash book, journal, ledger, and copies of bills and receipts, with a daily case register and inventory additionally required of medical practitioners.
How long records must be kept
| Regime | Retention |
|---|---|
| Income-tax — Rule 6F | 6 years from the end of the relevant assessment year |
| GST — Section 36 | 72 months from the due date of the annual return, extended to 1 year after final disposal where an appeal, revision or investigation is pending |
| Companies Act — Section 128(5) | 8 years |
In practice the longest applicable period governs. A company planning around the six-year tax rule will be short by two years against the Companies Act; a business under GST proceedings may need to hold records well beyond seventy-two months. This matters most when changing accounting software — the old system’s data has to remain retrievable for the full period, not merely be archived somewhere unreadable.
Electronic books and the audit trail requirement
Records may be kept electronically, and for most businesses they are. For companies there is an additional and often-missed obligation: accounting software must record an audit trail of each transaction and an edit log of each change, and the trail must not be capable of being disabled. It has applied since the financial year beginning 1 April 2023 and carries no turnover threshold, so a small private company on an off-the-shelf package is squarely within it. The auditor reports on it separately — covered in what auditors actually test in IT general controls.
If you are on presumptive taxation
Being within Section 44AD or 44ADA and declaring at or above the presumptive rate relieves you of the books requirement for that activity. That is a genuine simplification while it lasts.
The difficulty comes on exit. Declaring income below the presumptive rate after having used Section 44AD brings back both books and audit, and carries a five-year bar on the scheme — set out in Section 44AD or regular books. Keeping basic records even while presumptive is what makes that transition a matter of formatting rather than reconstruction.
What’s covered
- Day-to-day bookkeeping — sales, purchases, expenses, bank and cash, in Tally or a cloud ledger, from whatever you can share: exports, spreadsheets, or organised bill photos.
- Bank and ledger reconciliation every month, so differences are found while they can still be explained rather than at year end.
- GST-ready books — output and input tax tracked so the return draws from the same figures the books carry, with the GSTR-2B reconciliation handled alongside GST return filing.
- Payroll and TDS support — salary registers, TDS computation and the quarterly returns that follow.
- Periodic MIS — profit and loss, balance sheet, debtor and creditor ageing, at whatever frequency is useful.
- Year-end finalisation — closing entries, depreciation, provisions and financial statements, prepared so that audit and the income tax return run off the same numbers.
- Loan and funding documentation — where a bank facility is contemplated, books that support CMA data without a reconstruction exercise first.
Why one place rather than three
Most compliance failures are not failures of law but of reconciliation. GST turnover that does not agree with the books; books that do not agree with the income tax return; a stock figure in the audit that no ledger supports. Each mismatch is visible to the department, because both sides of it sit in their own data.
When bookkeeping, GST and the return are handled from one set of records, those differences are resolved as they arise instead of being discovered by an officer two years later. That is the practical argument for keeping them together, and it is why this service is usually taken alongside GST filing rather than on its own.
Who this is for
Small businesses, contractors, professionals, and startups that want reliable books without the cost and overhead of an in-house accountant — with a CA reviewing the work rather than leaving it to unsupervised data entry. Where a bank later asks for projections or CMA data for a working-capital loan, well-kept books are what make those numbers defensible — the figures have to reconcile with your GST and income-tax filings.
What to send first
A short description of the business, how records are kept today (Tally, spreadsheets, or bills), whether you are GST-registered, and access to last year’s accounts or returns if available. A clear plan for the books and the reporting cycle comes first, before any work begins.