The Ministry of Corporate Affairs (MCA) has amended the Companies (Account) Rules, 2014, regarding books of accounts. MCA through its notification dated 5 Aug 2022, had amended certain provisions under Rule 3 of the Account Rules. The amendments were related to the bookkeeping requirements for companies in India.

As per Amended Rule 3:

1. Accessibility: Books of accounts and other relevant books and papers maintained in an electronic mode should always remain accessible in India to be usable for subsequent reference.
2. Daily Backups in India: Companies to maintain the backup of the books of accounts and other relevant books and papers in an electronic mode on servers physically located in India daily, even in cases where such backups are maintained at a place outside India.
3. Annual Reporting: Company is required to intimate to the Registrar on an annual basis, at the time of filing of financial statement:
   1. The name, location, and internet protocol address of the service provider (wherever applicable).
   2. Where the books of accounts and other books and papers are maintained on the cloud, such address as provided by the service provider.
   3. Where the service provider is located outside India, the name and address of the person in control of the books of account and other books and papers in India.

Note: In the context of Section 128 of the Indian Companies Act, 2013, and related rules, a service provider refers to the entity that offers services for maintaining electronic records, including books of accounts and other relevant papers. This can include cloud storage providers, data centers, or any other third-party service that hosts and manages the company’s electronic records.

Auditor’s responsibility:

As per section 143(3) of the Companies Act, 2023, Auditor is required to report any non-compliance with respect to the back-up Rules.

Penalty for non-compliance:

As per section 128 of the Companies Act, 2013, the person charged by the Board with a duty to comply with the above provisions, if in case contravenes these provisions, such person shall be punishable with a minimum fine of Rs. 50,000 which may extend up to Rs. 5,00,000.