How Long Must You Keep Your Books of Account? Section 128 and the Other Clocks Running Beside It

Short answer first. If you run a company, keep your books of account for eight financial years. That is the longest clock, and it is the one in Section 128(5) of the Companies Act, 2013. Income-tax law asks for six years on its own count. GST asks for seventy-two months on a different count again. An LLP, too, lands on eight years, though its clock starts on a different date. Same shelf of records. Four deadlines for throwing them away.

Owners get into trouble here in a very ordinary way. Somebody reads one period — usually the six years — and clears out old records on that basis, while company law still had two years to run. Or the opposite: everything is kept forever, in no order, and the one year an auditor actually asks for cannot be found in the pile. Both are record-keeping failures. The legal framework behind our book-keeping work starts with Section 128 for exactly this reason, and this post maps every clock over your books, and the date after which a year's records can honestly go.

The company clock: eight financial years under Section 128(5)

Section 128(1) sets the duty itself: every company must prepare and keep books of account, other relevant books and papers, and financial statements for every financial year, giving a true and fair view, on the accrual basis and under the double-entry system. Section 128(5) then fixes how long those books live. Read its words carefully, because every part of the sentence does work:

The books of account relating to a period of not less than eight financial years immediately preceding a financial year, together with the vouchers relevant to any entry in those books, must be kept in good order.

Three points hide inside that sentence. First, the unit is financial years, not eight years from the date of a single entry. In the financial year 2026–27, your books must cover the eight financial years immediately before it, back to 2018–19. As each new year begins, the window moves forward by one — and only the year that falls out of it is even a candidate for destruction. Second, the vouchers travel with the books. An entry without its bill or receipt is a claim you cannot prove, and the section names the vouchers expressly. Third, the books must be kept in good order — readable, complete and retrievable, not merely present somewhere in a godown.

What if your company is younger than eight years? The section answers that too. A company that has been in existence for less than eight years keeps the books for all of its preceding years. A four-year-old company destroys nothing. Not yet. Its entire short history is still inside the window.

The one override: an investigation under Chapter XIV

Section 128(5) carries a proviso, and it removes the finishing line altogether in one situation. Where an investigation has been ordered in respect of the company under Chapter XIV of the Act — the chapter on inspection, inquiry and investigation — the Central Government may direct that the books of account be kept for such longer period as it deems fit.

Notice what the proviso does not do. It does not set a new number. There is no "ten years" waiting in the text; the period is whatever the direction specifies. So if an investigation is ordered, the eight-year count stops being your guide for the records it covers, and nothing should be destroyed until the direction's own period has run. In practice, the moment any inspection, inquiry or investigation is on foot, freeze destruction for the years it touches. That freeze costs shelf space. Destroying a demanded record costs far more.

The income-tax clock: six years from the end of the assessment year

Income-tax law runs its own, shorter clock, from a different date. Section 44AA of the Income-tax Act, 1961 requires specified businesses and professions to keep books. For the professions named in Section 44AA(1) — legal, medical, engineering, architecture, accountancy, technical consultancy, interior decoration and other notified professions — Rule 6F of the Income-tax Rules, 1962 prescribes the actual books: cash book, journal, ledger, copies of bills and receipts, original bills and payment vouchers, with a daily case register for medical professionals. Rule 6F(5) states the retention period in one line: those books are to be kept for six years from the end of the relevant assessment year.

Count that once, slowly. Books for the previous year 2025–26 belong to assessment year 2026–27. Six years from the end of that assessment year runs to 31 March 2033. The Rule 6F clock starts at the end of the assessment year, not at the end of the financial year in which you wrote the entries, so it reaches further than a quick "six years from the transaction" guess suggests.

Rule 6F(5) has its own proviso. If an assessment is reopened under Section 147 within the period allowed by Section 149, every book and document that existed when the reopening happened must continue to be kept until that reopened assessment is completed. The clock pauses, in effect, while the proceeding is alive.

Why does income-tax law want six years at all? Because that is roughly how long the department can come back to a year. Under Section 149(1), as it stands after the 2024 changes, a reassessment notice under Section 148 can be issued within three years and three months from the end of the relevant assessment year in ordinary cases, and within five years and three months where the escaped income is ₹50 lakh or more. That is a separate subject, and I am keeping it short — but hold the shape in mind: the retention period is built to outlast the window in which the year can be questioned. If your records end before the questions legally can, you are answering from memory. Memory is a poor witness.

One honest qualification. Rule 6F, by its own terms, prescribes books for the specified professions. For other businesses, Section 44AA(2) imposes the duty to keep such books as enable the Assessing Officer to compute total income, without the same named list. A company's position is unaffected either way — it is bound by the eight-year Companies Act clock, which is longer than six years on any way of counting.

The GST clock: seventy-two months from the annual return's due date

GST counts in months, from a third starting point. Section 36 of the CGST Act, 2017 says every registered person who must keep books of account or other records under Section 35(1) shall retain them until the expiry of seventy-two months from the due date of furnishing of the annual return for the year to which those accounts and records relate.

Seventy-two months is six years, but do not file it mentally as "the same six years". The start date is the due date of the annual return — not the date you actually filed it, not the end of the financial year. Take a year whose annual return was due on 31 December: seventy-two months from that due date lands on 31 December six years later. Since the annual return for a financial year falls due in the following year, the GST clock ends noticeably later than six years after that financial year closed.

Section 36 also has a proviso for live disputes. A registered person who is a party to an appeal, revision or other proceedings before an appellate or revisional authority, the Appellate Tribunal or a court — filed by the person or by the Commissioner — or who is under investigation for an offence under Chapter XIX, must retain the records relating to that subject matter for one year after the matter's final disposal, or for the seventy-two months, whichever is later. Proceedings stretch the clock. They never shorten it.

If you run an LLP: eight years again, counted from the day the books are made

LLP owners often assume a lighter statute means lighter record duties. On retention, it does not. Section 34(1) of the LLP Act, 2008 requires an LLP to maintain proper books of account for each year of its existence — on cash or accrual basis, under the double-entry system — at its registered office for such period as may be prescribed. That period sits in Rule 24(3) of the LLP Rules, 2009: the books an LLP is required to keep shall be preserved for eight years from the date on which they are made.

Eight years, again. The difference is the trigger. The Companies Act counts backward in whole financial years from the current one; the LLP rule counts forward eight years from the date the books are made. For a March year-end LLP the two counts land close together, but they are not the same test. If your group runs both a company and an LLP, do not apply one entity's rule to the other's files.

All four clocks, side by side

Read the table the way an owner should. These are not four separate record sets. Your sales invoices, purchase bills, bank statements and ledgers are one body of evidence, and each law reaches into the same files with its own ruler. Think of that shelf as a godown taken on four leases signed on different dates, each with its own end date. You hand the keys back only when the last lease expires — surrender the shelf when the first lease ends, and you are standing in someone else's premises with their goods still inside. For a company's books, the last lease to expire is almost always the Companies Act one.

Electronic books change the cupboard, not the clock

Most companies no longer keep paper ledgers, and Section 128(1) permits that: its second proviso allows books and other relevant papers to be kept in electronic mode, in the manner prescribed. The manner sits in Rule 3 of the Companies (Accounts) Rules, 2014. Books kept electronically must remain accessible in India at all times, so they can be used for later reference, and the back-up must be kept on servers physically located in India, on a daily basis.

One Rule 3 requirement deserves its own paragraph. For financial years commencing on or after 1 April 2023, a company that uses accounting software must use only software that records an audit trail of every transaction, creates an edit log of each change with the date it was made, and does not allow that audit trail to be disabled. The audit trail is part of the electronic record you are preserving. A back-up that restores the numbers but loses the edit log has not preserved the books as the rule contemplates them.

Two practical warnings from real files. A back-up nobody has ever test-restored is a hope, not a record — open last year's back-up once a year and prove it still reads. And vouchers scanned into a folder named "misc" are, in substance, lost. The habit of tying every bank entry to its paper, month by month, is what keeps old years provable; our guide to the monthly bank reconciliation routine shows how that discipline runs while the year is still young.

A destruction-day discipline that actually works

So when can you destroy a year's records? Only after every clock over that year has run out — and the honest way to run that check is as a small annual ritual, not a cleaning spree. This is the sequence I ask owners to follow:

1. List the years you hold, entity by entity. Company records, LLP records and a proprietor's or firm's tax records are separate lists; each carries its own clocks.
2. For each year, mark the end dates: eight financial years under Section 128(5) for a company, six years from the end of the assessment year under Rule 6F(5), seventy-two months from the annual return's due date under GST, eight years from the date made for an LLP.
3. Ask the proceedings question before anything moves: is any assessment reopened, any appeal pending, any GST proceeding or investigation alive, any Chapter XIV inquiry ordered, for that year? One yes stops that year's destruction, whatever the calendar says.
4. Destroy in whole years, never by picking through a year and keeping the "important" papers. The voucher you throw away is routinely the one that proves the entry you kept.
5. Record the destruction itself — which years, which boxes or folders, who approved it, on what date. Keep that note. It shows the records were held for their full statutory life and released on a decision, not lost in a clean-up.

Where does book-keeping end and this record duty begin? They are the same work seen from two ends — recording the transaction today, and being able to produce it years later. If the distinction between the recording, the reporting and the checking still blurs in your office, our explainer on bookkeeping, accounting and auditing, and where one ends and the next begins, sets the three apart in plain words.

Keep it simple, then. For a company, treat eight financial years as your working rule, vouchers included, and let no shorter clock talk you into an early clear-out. Check for live proceedings before any year is destroyed. Keep electronic books backed up in India, with the audit trail intact and a restore you have actually tested. Do that, and the oldest question in accounts — "show me the paper for this entry" — stays answerable for as long as anyone is legally entitled to ask it. If your records are in no order and you cannot say which years are safe to release, talk to our book-keeping team — we will map the clocks over your files, year by year, and put a retention list in writing before anything is destroyed.