Chapter IX - Accounts of Companies
Section 128
Section 128: books of account to be kept by company
Every company must keep books of account, other relevant books and papers and financial statements for each financial year at its registered office, on accrual basis and double-entry, giving a true and fair view including branches.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(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 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 fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.
Introduction
Section 128 is the base record-keeping duty of the Companies Act. It fixes the place of the books, the accounting basis, branch arrangements, a director’s right of inspection and an eight-year retention period.
The Companies (Amendment) Act, 2020 removed imprisonment from the punishment in sub-section (6), with effect from 21 December 2020. The fine range was not changed.
Key takeaways
Accrual and double entry
The books must give a true and fair view of the company, including branches, and be kept on accrual basis under the double-entry system.
Place of keeping
Keep them at the registered office, or at another place in India decided by the Board after filing the full address with the Registrar within seven days.
Eight years
Retain books and vouchers for at least the eight financial years preceding a financial year, or all years if the company is younger, unless a longer period is directed.
What must be kept and how
Section 128(1) requires books of account, other relevant books and papers and the financial statement for every financial year. They must give a true and fair view of the company’s affairs, including branch offices, explain transactions at the registered office and branches, and be kept on accrual basis according to double-entry accounting.
The books may also be kept in electronic mode in the manner prescribed by rules under the Act.
- India Code — consolidated Companies Act, 2013, section 128
- Gazette of India — Companies Act, 2013 as enacted (No. 18 of 2013), section 128
- eGazette — MCA notification S.O. 902(E), 26 March 2014 - listed provisions in force from 1 April 2014
- eGazette — Companies (Amendment) Act, 2020 (No. 29 of 2020)
- eGazette — MCA notification S.O. 4646(E) - listed sections of Act 29 of 2020 in force from 21 December 2020
Registered office, other place or branch
The default place is the registered office. The Board may decide that all or any of the books and papers be kept at another place in India; the company must then file a written notice with the Registrar giving the full address within seven days of the decision.
For a branch in or outside India, the company is treated as compliant if proper books for branch transactions are kept at the branch and proper summarised returns are sent periodically to the registered office or the other place.
Director inspection
Any director may inspect books and papers maintained in India at the registered office or the other place during business hours. For financial information maintained outside India, copies must be maintained and produced for a director’s inspection subject to prescribed conditions.
Inspection relating to a subsidiary may be done only by a person authorised by a Board resolution. Officers and employees must give the inspecting person all assistance the company may reasonably be expected to give.
Retention period and default
Books relating to at least the eight financial years immediately preceding a financial year, or all preceding years for a company in existence for less than eight years, must be kept in good order with the relevant vouchers. If an investigation has been ordered under Chapter XIV, the Central Government may direct a longer period.
If the managing director, the whole-time director in charge of finance, the Chief Financial Officer or another person charged by the Board with compliance contravenes the section, that person is punishable with fine of not less than fifty thousand rupees, extendable to five lakh rupees.
Practical preparation
Confirm accrual and double-entry basis; record the Board decision and seven-day Registrar notice for any other place; set branch return intervals; keep electronic records as prescribed; define a director-inspection procedure, including subsidiary authorisations; apply an eight-year (or longer directed) retention schedule; name the person charged with compliance.
Practical checklist
Do
- Record by Board resolution who is charged with complying with section 128.
- File the other-place notice with the Registrar within seven days of the Board decision.
- Retain vouchers with the books for the full retention period.
Avoid
- Do not move the company’s books to a place outside India; the proviso to sub-section (1) permits only another place in India (books of a branch are dealt with separately in sub-section (2)).
- Do not refuse a director’s inspection during business hours.
- Do not destroy records covered by a Chapter XIV direction for a longer period.
Illustrative example
Hypothetical: moving the accounts function
A company shifts its accounts team and books from its registered office to a shared-services office in another Indian city.
Board decision
Pass a Board resolution deciding that the books will be kept at the new place in India.
Notice
File a written notice with the Registrar giving the full address within seven days of the decision.
Access
Ensure directors can inspect the books at the new place during business hours and retention continues for eight years.
Outcome
- The move complies with section 128(1) once the Board decision is recorded and the Registrar notice is filed on time.
Glossary
- Books of account
- The accounting records the company must keep under section 128, read with the definition in section 2(13).
- Double-entry system
- The accounting system section 128(1) requires, recording each transaction in corresponding accounts.
- Other place in India
- A place decided by the Board for keeping books, notified to the Registrar within seven days.
Frequently asked questions
Can a company keep its books at its factory instead of the registered office?
Yes, if the Board so decides and the company files a written notice with the full address with the Registrar within seven days. The place must be in India.
How long must books be kept?
For at least the eight financial years immediately preceding a financial year, with vouchers, or all preceding years if the company is younger. A longer period can be directed where a Chapter XIV investigation has been ordered.
Is imprisonment still possible under section 128(6)?
No. The Companies (Amendment) Act, 2020 omitted imprisonment from 21 December 2020. The fine of fifty thousand to five lakh rupees remains.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026