Businesses delete old records to free up space and assume once a return is filed, the underlying documents no longer matter. That assumption has a cost if an assessment or audit follows.
Books of accounts retention requirements differ across three laws: 8 years under the Companies Act, 6 years under the Income Tax Act, and 5 years after the end of the financial year to which they relate under GST. The longest applicable period governs — for a company, that’s 8 years.
Not sure what your specific retention obligation is? WhatsApp us and we’ll confirm what applies to you.
Quick Reference — Retention Periods by Law
| Law | Retention Period | Calculated From |
| Companies Act, 2013 — Section 128(5) | 8 years | End of financial year |
| Income Tax Act, 1961 — Section 44AA / Rule 6F | 6 years | End of relevant assessment year |
| Income Tax Act, 2025 (from AY 2026-27 onward) | Check renumbered provision | Effective 1 April 2026 — verify current numbering |
| CGST Act, 2017 — Section 35 | 5 years + period of any pending proceedings | End of financial year |
| PF / ESIC / Labour laws | 5–7 years depending on specific regulation | Varies by document type |
The “Ongoing Proceedings” Exception That Extends Everything
GST’s 5-year retention period has an important catch: if any proceedings under the CGST Act are pending (a notice, an audit, an appeal), the obligation to maintain records continues until those proceedings are fully concluded — regardless of how many years have passed. A business that received a DRC-01 notice in year 4 and doesn’t resolve it for another 3 years effectively has a 7-year retention obligation for that period’s records. Never delete records tied to periods with any open proceedings.
What “Books of Accounts” Actually Means Under Each Law
Under the Companies Act, it includes: cash book, day book, ledgers, bills payable and receivable journals, all transaction records, annual financial statements. Under the Income Tax Act, for professionals and specified businesses: a cash book, journal, ledger, and for some categories, bills, receipts, and a register of fixed assets. For GST: all records of production, manufacture, purchase, supply, input and output tax, and any other documents required to assess GST liability.
Electronic Records Change the Storage Question, Not the Retention Period
Most businesses now maintain records digitally. The retention obligation is the same whether records are digital or physical — but electronic records carry an additional expectation that they’re backed up, accessible, and readable throughout the retention period, not just stored on a drive that’s since become unreadable. Regularly backed-up, organized digital records are better than boxes of physical documents that can’t be found when an auditor asks for a specific invoice.
The Audit Trail Rule Connects Here
For companies using accounting software from 1 April 2023 onward, the mandatory audit trail requirement means the software must maintain an edit log for the full 8-year retention period — not just the current year. A business that switches software or deletes old data without retaining the audit trail is non-compliant on retention separately from any other issue. See our mandatory audit trail post for specifics.
Frequently Asked Questions
Does the 8-year Companies Act period apply to all companies, including small companies?
Yes — Section 128(5) applies to all companies registered under the Act, regardless of size or category.
What happens if a document is physically destroyed in a genuine accident during the retention period?
Document the incident (FIR, insurance claim, whatever is applicable) and report it to the relevant authority where required. A genuine, documented accidental loss is treated differently from deliberate deletion, though you may still face practical difficulty in any subsequent proceedings where that document would have been relevant.
If I close my business, how long do I need to retain records afterward?
Retention obligations don’t automatically terminate when a business closes. For a company, records must be retained through the applicable period even post-dissolution, typically by whoever holds the final custody of records after winding up.
Are digital signatures and e-invoices subject to the same retention rules?
Yes — e-invoices with IRNs, digitally signed documents, and electronic records of GST filings are all subject to the same retention periods as physical equivalents.
Can the Income Tax Department ask for records older than six years?
Yes. Although six years is the standard retention period in many cases, records relating to pending assessments, reassessment proceedings, appeals, search cases, or investigations should be preserved until the matter is finally concluded. Destroying records while proceedings are pending can create serious practical and legal difficulties.
References
- Companies Act, 2013 — Section 128(5) (8-year retention for companies)
- CGST Act, 2017 — Section 35 (GST records and retention)
- Income Tax Act, 1961 — Section 44AA and Rule 6F (books of accounts requirement for specified professions)
⚠️ Income Tax Act 2025 came into force from 1 April 2026. Confirm the renumbered provision for books of accounts retention under the new Act at incometax.gov.in.
Last Updated: 08 July 2026
Reviewed By: TaxKitab Team
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