Question 1

What books of account must a company maintain under the Companies Act?

Accepted Answer

Section 128 of the Companies Act 2013 requires every company to maintain books of account at its registered office on an accrual basis using the double-entry system. Books must be preserved for eight financial years. Failure to maintain proper books exposes officers to imprisonment up to one year or a fine up to Rs 5 lakh under Section 128(6).

Question 2

Which businesses are required to maintain books under the Income-tax Act?

Accepted Answer

Section 44AA of ITA 1961 (corresponding to Section 63 of ITA 2025 for TY 2026-27 onwards) mandates books of account for professionals (law, medicine, engineering, architecture, etc.) whose gross receipts exceed Rs 1.5 lakh in any of the three preceding years, and for specified businesses. The prescribed books are listed in Rule 6F of the Income-tax Rules 1962.

Question 3

When is a tax audit compulsory and what does the outsourced accountant need to prepare?

Accepted Answer

A tax audit under Section 44AB of ITA 1961 (Section 63 of ITA 2025) is mandatory when business turnover exceeds Rs 1 crore (or Rs 10 crore if cash transactions are under 5%). The auditor files Form 3CA/3CB along with Form 3CD. The outsourced accountant must prepare reconciled financials, ledger schedules, loan statements, and depreciation workings so the statutory auditor can complete Form 3CD without gaps.

Question 4

What are the GST record-keeping obligations that outsourced accounting must cover?

Accepted Answer

Section 35 of the CGST Act 2017 requires every registered person to maintain accounts and records at each place of business for a period of 72 months (six years) from the due date of the annual return. Mandatory records include purchase/sale registers, production records, stock registers, and ITC registers. Non-maintenance attracts penalty under Section 122(1)(xi) of CGST Act 2017.

Question 5

How does TDS compliance fit into the outsourced accounting scope?

Accepted Answer

Under Rule 31A of the Income-tax Rules 1962, a deductor must file TDS returns (Form 24Q for salaries, Form 26Q for non-salary payments) quarterly and issue Form 16/16A within the prescribed due dates. The outsourced accountant tracks every payment against applicable TDS sections (e.g. Section 194C for contractors, 194J for professionals under ITA 1961), computes deductions, and reconciles with TRACES before return filing.

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