Business
India — Business: Accounting
Indian businesses (sole proprietors, partnerships, LLPs, private limited companies, professionals, and freelancers above specified thresholds) must maintain proper financial records — cash book, ledger, journal, sales/purchase registers, bank reconciliation statements, fixed asset register, salary/wages register, stock register, and GST records — under the Companies Act 2013, Income Tax Act 1961, and CGST Act 2017. Electronic record-keeping is explicitly permitted (Companies (Accounts) Rules 2014, Rule 3; Income Tax Rules 2026, Rule 46(8)). Since 1 April 2023, companies must use accounting software with a functioning audit trail (edit log) for every transaction, and statutory auditors must report on whether this audit trail feature is enabled.
Key facts
- Required records: cash book, ledger, journal, sales/purchase registers, bank reconciliation, fixed asset register, salary/wages register, stock register, GST records.
- Electronic bookkeeping is explicitly permitted under Companies (Accounts) Rules 2014 and Income Tax Rules 2026.
- Since 1 April 2023, companies must use accounting software with a functioning audit trail (edit log) for every transaction.
- Statutory auditors must specifically report on whether the company's accounting software audit trail feature is enabled and functioning.
Required documents
- Cash book, ledger, journal
- Sales and purchase registers
- Bank reconciliation statements
- Fixed asset register
- GST records
Common mistakes
- Using accounting software without a functioning audit trail (edit log) feature — mandatory since 1 April 2023 and specifically checked by statutory auditors.
- Assuming bookkeeping obligations apply only to companies — sole proprietors, partnerships, and freelancers above certain thresholds are also required to maintain proper records.