Do not run an invoice-age deletion rule against company books
Under Companies Act section 128(5), preserve books for at least the eight financial years immediately preceding a financial year, together with vouchers relevant to their entries, in good order. A company in existence for less than eight years must preserve all preceding years. This minimum does not authorise automatic destruction as soon as a file falls outside the window. Check investigation directions and other applicable holds. The analysis is checked on 24 October 2026 and examples expressly assume an April–March financial year.
Count completed financial years and retain the current books too
During FY 2026–27, the eight immediately preceding years run from FY 2018–19 through FY 2025–26. Current-year record maintenance is separately required by section 128(1). An archive containing eight historical years should therefore not omit the live-year books. The minimum rolling window advances when the financial year changes; it is not recalculated independently from every voucher’s date.
For a younger company, include its first applicable financial period even if shorter than a normal year. Do not invent pre-incorporation company books to fill an eight-year counter. Establish incorporation, the actual first financial year and any lawfully different financial-year arrangement before populating the schedule. The worked cases do not decide eligibility for a non-standard financial year.
Vouchers are part of the retention obligation
A signed financial statement and audit report do not replace the underlying books and vouchers. Index invoices, credit notes, journals, bank evidence and other support against the entries they substantiate. Completeness matters: a folder may exist for each year while important attachments are missing. Retain readable records, transaction linkage and the means to retrieve them; a file count is only a control, not proof that every entry is supported.
Electronic retention involves additional prescribed requirements under section 128’s electronic-mode framework. This article does not claim that a PDF export or cloud snapshot, by itself, establishes compliance, nor that scanning automatically permits destruction of originals. Verify the applicable electronic-record rules, audit-trail, access and backup requirements separately. A software migration should include a documented restoration and voucher-linkage check before shutting down old access.
The eight-year minimum is not the only preservation test
The proviso to subsection (5) permits the Central Government to direct a longer period where an investigation under Chapter XIV has been ordered. Identify the actual direction and scope rather than assuming every review creates the same extension. Independently consider other applicable law, pending litigation, contractual obligations and records supporting continuing balances or rights. Distinguish a statutory requirement, a specific legal hold and a prudent internal retention policy in the schedule.
Document disposal as a controlled decision: identify the year and record class, confirm minimum-period expiry, search for holds, obtain the appropriate internal authorisation and log what was actually disposed of. Do not treat the article’s window calculations as instructions to destroy records. A company secretary, finance custodian and legal team may need to resolve overlapping obligations before approval.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Current-year baseline
In FY 2026–27, list FY 2018–19, 2019–20, 2020–21, 2021–22, 2022–23, 2023–24, 2024–25 and 2025–26: eight preceding financial years. Including the live FY 2026–27 produces nine year-files in this simplified control, not permission to omit the live books.
Illustrative example 2: Window advances next year
In FY 2027–28, the eight preceding years are FY 2019–20 through FY 2026–27. FY 2018–19 drops outside this minimum window, but disposal still requires the separate hold and other-obligation review.
Illustrative example 3: Company with a shorter history
Assume incorporation on 15 December 2023 and a first financial period ending 31 March 2024. In FY 2026–27, its preceding company periods are FY 2023–24, FY 2024–25 and FY 2025–26: three, plus the live fourth year. Retain all three preceding periods rather than only the most recent one.
Illustrative example 4: Vouchers missing within a retained year
A reconciled entry-support index expects 1,200 voucher records but can retrieve only 1,170. Thirty are missing and the retrieval count is 97.5% of the expected set. A completed audit does not turn those thirty missing records into retained vouchers.
Illustrative example 5: Longer investigation direction
Assume an actual applicable Central Government direction requires FY 2015–16 through FY 2025–26 to be kept during FY 2026–27. That is eleven preceding year-files, three more than the ordinary eight-year window. Follow the established direction rather than deleting the earlier three solely from an age filter.
Illustrative example 6: A separate specific hold
In FY 2026–27, the ordinary eight-year set is retained and a separately established legal hold requires FY 2016–17 records. The union contains nine distinct historical year-files, plus the live year. Do not count the held year as one of the eight immediately preceding years or treat a gap year as automatically subject to the same hold.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Establish the actual financial-year structure | Incorporation and financial-year records |
| 2 | List the immediately preceding eight years | Dated rolling-window schedule |
| 3 | For a younger company, list all preceding periods | First-period and existence reconciliation |
| 4 | Keep live-year records outside the archive counter | Current books and supporting records |
| 5 | Map vouchers to book entries | Transaction and attachment index |
| 6 | Test completeness and retrieval | Missing-item and restoration evidence |
| 7 | Check Chapter XIV investigation directions | Actual direction and required preservation scope |
| 8 | Review other laws and specific holds | Litigation, contractual and continuing-rights analysis |
| 9 | Assess electronic-mode compliance separately | Applicable rules, access and backup evidence |
| 10 | Approve and log any disposal after review | Authorisation, scope and disposal record |
Sixteen practitioner FAQs
1. Is the test eight years from each invoice date?
No. Subsection (5) uses financial years immediately preceding a financial year.
2. Does the current year count as one of those preceding years?
No. Maintain its records separately under the applicable current-year duty.
3. What is the FY 2026–27 ordinary historical window?
For the assumed April–March year, FY 2018–19 through FY 2025–26.
4. Must a younger company fabricate eight years of books?
No. It preserves all actual preceding company periods.
5. Can a short first financial period be ignored?
Identify and preserve the company’s actual first applicable period.
6. Do signed statements replace vouchers?
No. The duty expressly includes vouchers relevant to book entries.
7. Is one folder for each year enough?
Check record completeness and retrievability, not folder names alone.
8. Does an audit close the retention obligation?
It does not itself discharge the separate preservation duty.
9. What may extend the section 128 period?
The stated investigation proviso permits a Central Government direction for longer retention.
10. Does every internal review automatically have the same legal effect?
No. Identify the actual statutory or other preservation basis.
11. Can other legal holds require older records?
Assess the applicable law and specific hold separately from the minimum window.
12. Are continuing asset records automatically disposable?
Review their evidential purpose and all applicable obligations before disposal.
13. Does scanning automatically permit shredding originals?
No such universal permission is established here.
14. Does a PDF alone prove electronic-mode compliance?
No. Check the applicable prescribed requirements separately.
15. What changes at an accounting-system migration?
Preserve usable books, attachments and required access, with a documented recovery test.
16. Who should sign off on deletion?
The appropriate internal authorities after finance, secretarial and legal preservation requirements are resolved.
Conclusion
Build the retention calendar from financial years, then layer vouchers, current records and specific holds onto it. Treat disposal as a documented decision after all relevant obligations are checked.