Chapter 2 Meaning and Fundamentals of Double Entry Book-Keeping
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Project on BK & Accountancy
The history of accountancy in India dates back
to ancient times, with records indicating the presence of rudimentary
accounting practices in early civilizations such as the Indus Valley
Civilization. However, the formalization and modernization of accounting
principles and practices in India began during the colonial period and evolved
significantly over time.
1. Ancient Period: Accounting practices in ancient India were primarily focused on
record-keeping for trade, taxes, and administrative purposes. Early Indian
texts such as the Arthashastra by Chanakya (Kautilya) and the Manusmriti
contain references to accounting and taxation systems. Merchants and traders
maintained records of transactions using various methods such as writing on
palm leaves, cloth, or other materials.
2. Medieval Period: During the medieval period, accounting continued to develop,
particularly in relation to trade and commerce. With the emergence of large
empires and kingdoms, the need for more sophisticated accounting methods grew.
However, detailed historical records on accounting practices during this period
are limited.
3. Colonial Era: The formalization of modern accounting principles in India can be
traced back to the British colonial period. The British East India Company
introduced Western accounting practices to manage its trading activities in
India. With the establishment of the British Raj, accounting standards and
practices were further institutionalized to meet the requirements of the
colonial administration.
4. Early 20th Century: The early 20th century witnessed significant developments in the
field of accounting in India. The Indian Companies Act of 1913 mandated
companies to maintain proper accounting records and submit financial statements
annually. The establishment of professional accounting bodies such as the
Institute of Chartered Accountants of India (ICAI) in 1949 further contributed
to the growth and standardization of accounting practices in the country.
5. Post-Independence Era: After gaining independence in 1947, India began to chart its own
course in accounting regulation and education. The government played a
significant role in shaping accounting standards and practices to suit the
needs of the Indian economy. The establishment of the Institute of Cost
Accountants of India (ICAI) in 1959 and the Institute of Company Secretaries of
India (ICSI) in 1968 further expanded the scope of professional accounting
education and practice in the country.
6. Globalization and Liberalization: The period of economic liberalization
starting in the early 1990s brought significant changes to the accounting
landscape in India. The adoption of International Financial Reporting Standards
(IFRS) and convergence with global accounting norms became a priority to
facilitate cross-border trade and investment.
7. Recent Developments: In recent years, India has witnessed
further reforms in accounting standards and practices to align with
international best practices. The introduction of Goods and Services Tax (GST)
in 2017 necessitated changes in accounting and tax compliance requirements for
businesses across the country.
Today, accounting in India is governed by a comprehensive regulatory framework comprising statutory provisions, accounting standards issued by the ICAI, and regulatory oversight by authorities such as the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI). The profession continues to evolve in response to changing business environments, technological advancements, and globalization trends.