Switching accounting or GST software without losing records: migration, audit trail and retention rules

The safest time to switch accounting or GST software is at the start of a financial year (1 April), after the previous year's books are closed and reconciled, with a full export of old data kept outside both systems for as long as the law requires: under the CGST Act, generally 72 months from the due date of the annual return for each year. If you are a company, the new software must have the audit trail (edit log) required by the Companies (Accounts) Rules turned on from day one. Switching mid-year is possible, but needs reconciled opening balances and a period of parallel running.

This guide is part of the guide to common GST filing mistakes. We describe migration in general terms and do not rank products. If your CA holds your data, agree the handover first (see working with a CA or GST practitioner); the record-keeping rules are on the portals listed in official GST sources.

Good and bad reasons to switch

Good reasons	Weak reasons
Current tool cannot handle GSTR-1A, IMS, e-invoicing or multiple GSTINs	A cheaper first-year offer, without checking renewal price
Reconciliation takes too many hours	A single bad support experience
You need cloud access for staff or your CA	The new tool looks nicer
You are becoming a company and need audit trail compliance	Switching near GSTR-9 season
Data security or backup concerns	Your accountant prefers it but will not maintain it

Before switching, run the numbers in the software payback calculator and the software selection checklist.

What must be migrated

Data	Needed for	Migration tip
Masters: customers and suppliers with GSTIN, state, addresses	Correct invoices and reconciliation	Validate every GSTIN after import
Item masters with HSN/SAC and rates	Correct tax and Table 12 reporting	Check rates after GST 2.0 (22 September 2025)
Opening balances: debtors, creditors, bank, stock	Correct ledgers	Tie to closing trial balance of the old system
Unpaid purchase bills with dates	180-day ITC reversal tracking	Carry invoice dates, not just balances
Open sales invoices and advances	Collections and liability	Include receipt vouchers for advances
Pending ITC (invoices not yet in GSTR-2B)	Claims within section 16(4) time	Keep a separate list
Electronic ledger balances (cash, credit)	Reference only; balances stay on the portal	Download ledgers from the portal
Prior-year transactions	Records, notices, audit	Keep a read-only copy or full export

The migration plan

Choose the cut-over date, ideally 1 April, after the March returns are filed.
Freeze and close the old books: final trial balance, stock valuation, GST reconciliation for the year.
Export everything from the old system in an open format (spreadsheet/CSV/JSON) and its native backup. Store copies on two separate media.
Set up the new system: company details, GSTINs, financial year, tax settings, users and rights.
Import masters and opening balances, then compare the opening trial balance with the old closing one line by line.
Parallel-run one month: record April in both systems and compare GSTR-1 and GSTR-3B outputs.
Go live, and keep the old system (or its read-only version) accessible for audits and notices.

Illustrative timeline. A Kanpur distributor plans the switch for 1 April 2027: closes FY 2026-27 books by mid-April, imports masters and balances by 20 April, parallel-runs April, and drops the old system after the April returns are filed in May. The old licence is kept in read-only mode for a year and the export kept for the retention period.

Audit trail for companies

The proviso to rule 3(1) of the Companies (Accounts) Rules, 2014, applicable from 1 April 2023, requires every company that uses accounting software to use software that records an audit trail of each change, with the date of change, and does not allow the audit trail to be disabled. Auditors report on it. The rules also require backups of books kept in electronic form to be maintained on servers physically located in India on a daily basis (rule 3(5), as amended in 2022).

When switching:

confirm the new software has a compliant audit trail and that it is on from the first entry;
keep the old system's audit trail data with the exported records;
tell your statutory auditor about the switch and the cut-over date.

Proprietorships and partnership firms are not covered by the Companies Act rule, but an edit log is still good practice and helpful in GST disputes.

GST record retention

Section 36 of the CGST Act requires every registered person to keep accounts and records for 72 months from the due date of furnishing the annual return for the year to which they relate. If an appeal, revision or other proceeding is pending, or you are under investigation, records for that matter must be kept until one year after final disposal, or the 72 months, whichever is later.

Example. For FY 2025-26, the annual return due date is 31 December 2026. Records must be kept until at least 31 December 2032. A software subscription that lapses in 2028 must not take those records with it.

Record retention for income-tax and company law purposes has its own rules; ask your accountant to align all three.

Common migration mistakes

Migrating balances without invoice detail, so the new system cannot track 180-day ageing or match old invoices to payments.
Duplicate invoice series: starting the new system's numbering from 1, clashing with invoices already issued in the year. GST requires a unique serial number per financial year.
Wrong GSTIN state codes on imported parties, turning CGST + SGST into IGST.
Losing the old data when the subscription ends; always export before cancelling.
No parallel run, so errors appear first in a filed GSTR-1.

The broader list is in common GST filing mistakes, and GST software pricing models covers contract terms on data export.

Frequently asked questions

Does switching software affect my GST portal data?

No. Returns, ledgers and GSTR-2B stay on the portal. Only how you prepare data changes. Download portal ledgers and returns for your records anyway.

Can I continue the same invoice numbering in new software?

You can continue the series, provided numbers remain unique and consecutive within the financial year. Many businesses use a new prefix from the cut-over date.

Do I need my CA's approval to switch?

Not legally, but involve your CA and, for companies, the auditor, to agree the cut-over and closing figures.

What if the old provider will not give my data?

Check your contract and request an export before your plan expires. This is why export terms should be checked before buying.

Sources

Ministry of Corporate Affairs — Companies (Accounts) Rules, 2014, rule 3 on electronic books, audit trail and backups
CBIC GST — section 35 and 36 of the CGST Act; rules 46 and 56–58 on invoices and records
GST portal — downloading returns, ledgers and GSTR-2B