On 12-08-2022, the Ministry of Corporate Affairs (MCA) has notified Companies (Accounts) Fourth Amendment Rules, 2022 in order to amend the Companies (Accounts) Rules, 2014. The amendments have been made in the provision relating to ‘Manner of books of account to be kept in electronic mode’.
THREE Important changes In Rules to be considered:
In the Companies (Accounts) Rules, 2014, in Rule 3 relating to Manner of books of account to be kept in electronic mode –
1. In sub-rule (1), for the words “accessible in India”, the words “accessible in India, at all times,” shall be substituted;
Original Sub Rule 1
(1) The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India so as to be usable for subsequent reference.
Provided that for the financial year commencing on or after the 1st day of April, 20231st day of April, 2022 1st day of April, 2021, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
2. In sub-rule (5), in the proviso, for the words “periodic basis”, the words “daily basis” shall be substituted.
Provided that the back-up of the books of account and other books and papers of the company maintained in electronic mode, including at a place outside India, if any, shall be kept in servers physically located in India on a daily basis.
Original Sub rule 5
(5) There shall be a proper system for storage, retrieval, display or printout of the electronic records as the Audit Committee, if any, or the Board may deem appropriate and such records shall not be disposed of or rendered unusable, unless permitted by law:
Provided that the back-up of the books of account and other books and papers of the company maintained in electronic mode, including at a place outside India, if any, shall be kept in servers physically located in India on a periodic basis.
3. In sub-rule (6), the following clause shall be inserted, namely: –
“(e) 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.”.
Original Sub Rule 6
(6) The company shall intimate to the Registrar on an annual basis at the time of filing of financial statement-
(a) the name of the service provider;
(b) the internet protocol address of service provider;
(c) the location of the service provider (wherever applicable);
(d) where the books of account and other books and papers are maintained on cloud, such address as provided by the service provider.
Explanation.- For the purposes of this rule, the expression “electronic mode” includes “electronic form” as defined in clause (r) of sub-section (1) of section 2 of Information Technology Act, 2000 (21 of 2000) and also includes an electronic record as defined in clause (t) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000) and “books of account ” shall have the meaning assigned to it under the Act.
Written By- CA Jatin Minocha
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Comment: