Company compliance is an important aspect that has to be taken into account while running a business. It is mandatory to adhere to all the ROC compliance to avoid penalties. All private limited companies, one-person companies, limited companies, and section 8 companies must maintain annual compliance with respect to the Companies Act of 2013. These company compliances are usually independent of the total turnover or the capital amount involved. The ROC compliance for registered private limited companies is mandatory. Not being able to adhere to the annual compliances for private limited companies may result in serious action on the firm.
In reality, it is tough to maintain all the annual compliances for private limited companies. That is why Vakilsearch is here to help with the annual filings of companies and provide information regarding company compliances.
Private Limited Company is most popular to start a startup. Private limited company, one person company, limited company and section 8 company must file MCA annual return and income tax return each year. Apart from basic compliance like GST return, TDS filing, ESI and PF return private limited company must file its Income tax return irrespective of income, profit or loss. In nutshell, annual ROC and monthly GST, TDS, EPF/ESI compliance are applicable on private limited company.
Before filing annual return, the company must conduct an Annual General Meeting at the end of each financial year. For newly incorporated private limited company following are the few compliances which are necessary to do:
Similar to other businesses, the annual compliance of private limited companies should be taken seriously. All the company compliances should be filed on or before the due date. Here are some of the private limited company compliances that you should not miss.
As a part of the annual compliance for private limited companies, it is mandatory to have a business commencement certificate within 180 days of company incorporation. This applies to companies registered after November 2019 and having a share capital.
Penalty for not following this annual compliance: If you fail to procure the certificate of commencement, the company will be subjected to a penalty of ₹50000 and the director should pay ₹1000 for each default day.
Within 30 days of incorporation, an auditor must be appointed as per the ROC compliance. The annual filing of a company should include all of this information.
Penalty for not following this annual compliance: Breaching this private limited company compliance results in a fine of ₹300 per month. Subsequently, the company will not be allowed to conduct business until they appoint an auditor.
For private limited companies, this annual compliance is crucial. Every year the income tax returns have to be filed on or before the due date.
Private limited companies must submit form AOC 4 to the MCA to adhere to the annual compliance. This has to be completed on or before 13 November.
Penalty for not following this annual compliance: Failure to file this form will result in a penalty of ₹200 per day of default.
As a part of private limited company compliance, it is crucial to file the MCA form MGT-7 on or before 31 December of every year.
Penalty for not following this annual compliance: Defaulters should pay a penalty of ₹200 for every day of default throughout the period.
As per the ROC compliance, every private limited company should have a director. To perform all the tasks without difficulty, a Director Identification Number (DIN) is required. The director of the company should file DIN eKYC within the speculated period.
Penalty for not following this annual compliance: In case of any default or delay the director should pay a penalty of ₹5000.
This is crucial for annual compliance for private limited companies. During the annual filing of companies, all information about the AGM should be provided. It is required to hold an AGM within six months of the end of the fiscal year by ROC compliance.
Private company compliance involves providing director reports on time with the ROC and MCA. All the information should be submitted without fail as per Section 134.
As per the rules, companies registered in India after November 2019 are required to obtain certificate of Commencement of business within 180 days of incorporation of the company. If company fails to obtain the Commencement of business certificate, a penalty of Rs. 50,000 for the company and a penalty of Rs.1000 per day for the Directors for each day of default.
All companies registered in India must appoint an Auditor of the company within 30 days of incorporation otherwise it will lead to a penalty of Rs.300 per month and the company would not be allowed to commence business.
| GST | Goods and Services tax (GST) registration is based on the turnover of business. If private limited company is registered under GST, it is compulsory to file GST return. |
| TDS | Tax deducted at source (TDS) rules is applicable on transaction based. Like: if private limited company is paying salary to any employee which is more than the basic exemption limit and tax is applicable, TDS is required to deduct from salary and paid to government on monthly basis. |
| ESI & EPF | In nutshell, every factory/business engaged in the business as per the act and employed 20 or more persons are required to register under the act. Monthly payment of PF contribution and filing of Return is mandatory. |
| Financial Statement as per companies act,2013 | Balance Sheet, Profit Loss statement and Cash flow statement are the part of financial statement of the company as per companies act,2013 which is required to prepare annually. |
| Annual General Meeting | Annual General Meeting (AGM) of a company is compulsory to conduct. AGM of newly registered company should be held within 18 months from date of incorporation or 9 months from the date of closing of financial year, whichever is earlier. Subsequent Annual General Meetings should be held within 6 months from the end of that financial year. So a Company’s annual return would be due on or before 30th September. |
| Income Tax Return (ITR) of Private limited company | As per the income tax act, 1961, Income Tax Return (ITR) of private limited company is compulsory to file irrespective of its Income or loss. The ITR form applicable to company is ITR-6. |
| Form MGT-7(Annual Return of company): | Every company is required to file the annual return as per The Companies Act, 2013 within 60 days from the conclusion of the Annual General Meeting. |
| Form AOC-4(Filing Annual Accounts of company): | The financial statements of company must file in MCA Form AOC-4 within 30 days from the conclusion of the Annual General Meeting. |
| Income Tax Return (ITR) of Directors | Directors in the company get salary and sitting fees from the company. They are also required to file their Income tax return annually. |
| Audit | As per the act, audit of accounts and submission of audit report of a company certified by CA (Chartered Accountant) is mandatory. |
One Person Company (OPC) is a popular establishment for startups, if initial investment is only from the promoter. MCA has also given some relief to One Person Company in its annual compliance. Basically, One Person Company (OPC) is mandatorily required to maintain compliance as per Income Tax Act and Companies Act. Two main compliances of OPC are required annually:
OPC must file ROC annual return and income tax return each year. Apart from basic compliance like GST return, TDS filing, ESI and PF return One person company must file its Income tax return irrespective of income, profit or loss.
Before filing annual return, the company must conduct an Annual General Meeting at the end of each financial year. For newly incorporated OPC, some initial compliances which are necessary to do:
As per the rules, companies registered in India after November 2019 are required to obtain certificate of Commencement of business within 180 days of incorporation of the company. If company fails to obtain the Commencement of business certificate, a penalty of Rs. 50,000 for the company and a penalty of Rs.1000 per day for the Directors for each day of default.
All companies registered in India must appoint an Auditor of the company within 30 days of incorporation otherwise it will lead to a penalty of Rs.300 per month and the company would not be allowed to commence business.
| GST | Goods and Services tax (GST) registration is based on the turnover of business. If private limited company is registered under GST, it is compulsory to file GST return. |
| TDS | Tax deducted at source (TDS) rules is applicable on transaction based. Like: if private limited company is paying salary to any employee which is more than the basic exemption limit and tax is applicable, TDS is required to deduct from salary and paid to government on monthly basis. |
| ESI & EPF | In nutshell, every factory/business engaged in the business as per the act and employed 20 or more persons are required to register under the act. Monthly payment of PF contribution and filing of Return is mandatory. |
| Financial Statement as per companies act,2013 | Balance Sheet, Profit Loss statement and Cash flow statement are the part of financial statement of the company as per companies act,2013 which is required to prepare annually. |
| Annual General Meeting | Annual General Meeting (AGM) of a company is compulsory to conduct. AGM of newly registered company should be held within 18 months from date of incorporation or 9 months from the date of closing of financial year, whichever is earlier. Subsequent Annual General Meetings should be held within 6 months from the end of that financial year. So a Company’s annual return would be due on or before 30th September. |
| Income Tax Return (ITR) of Private limited company | As per the income tax act, 1961, Income Tax Return (ITR) of private limited company is compulsory to file irrespective of its Income or loss. The ITR form applicable to company is ITR-6.15 |
| Form MGT-7(Annual Return of company): | Every company is required to file the annual return as per The Companies Act, 2013 within 60 days from the conclusion of the Annual General Meeting. |
| Form AOC-4(Filing Annual Accounts of company): | The financial statements of company must file in MCA Form AOC-4 within 30 days from the conclusion of the Annual General Meeting. |
| Income Tax Return (ITR) of Directors | Directors in the company get salary and sitting fees from the company. They are also required to file their Income tax return annually. |
| Audit | As per the act, audit of accounts and submission of audit report of a company certified by CA (Chartered Accountant) is mandatory. |