Annual Compliance – Company

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Annual Compliance – Company

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Bookkeeping, Auditor appointment, 1 year accounting, Financial statement preparation, MCA annual return filing, 1 year Income Tax return filing, 1 year Dedicated Compliance Manager support and 1 year Dedicated Accountant and LEDGERS accounting software for a company with a turnover upto 20 lakhs per annum.

About this item

  • Auditor Appointment
  • 1 Year Accounting
  • Financial Statement Preparation
  • 1 Year Dedicated Accountant
  • 1 Year Income Tax Filing
  • 1 Year Dedicated Compliance Manager
  • 1 Year DIN KYC for upto 2 Directors

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Description

Annual Compliances for Private Limited Company

The term compliance describes the ability to comply with orders, set of rules, or requests.

A private limited company that has been incorporated in India must ensure the compliances concerning the Companies Act, 2013 are adequately met.

The Companies Act, 2013 regulates the appointment, qualification, remuneration, and retirement of the Company’s Directors and other aspects such as conducting board meetings and shareholder meetings.

The RoC compliance for registered Private Limited Companies is necessary. Irrespective of the total turnover or the capital amount, the company must comply with the annual compliance requirement.

All companies registered in India like a private limited company, one person company, limited company, and section 8 company need to maintain the annual compliances like annual returns and income tax return each year. Though Company Registration happens to be the most popular form of starting a business, various compliances need to be followed once the business is Incorporated.

Managing the business’s everyday operations while complying with the difficult corporate laws can be a task for the entrepreneur. So, it is always better to take the professionals’ help and understand the legal requirement to ensure timely fulfillment of these compliances to waive off the penalties or fines.

Here, we will look at some of the Common compliances that a private limited company has to ensure mandatorily.

RELATED GUIDES

The compliance requirement for Private Limited Company has changed drastically over the years. Following is the summary of the private limited company compliance due dates in 2021.

ComplianceDescription
Commencement of business ( within 180 days)For companies registered in India after November 2019, having a share capital, it is necessary to obtain a commencement if business certificate before commencing any business or exercising the borrowing powers. The commencement of business certificate must be obtained within 180 days of incorporating a Company.
In case the individual fails to obtain this certificate, there is a penalty of Rs. 50,000 for the company Rs. 1000 per day for the directors for each day of default.
Auditor Appointment (Within 30 days)All registered Indian Companies must appoint a Statutory auditor within 30 days of incorporation. If the company fails to appoint an auditor, the company won’t be allowed to commence business. Also, there is a penalty of Rs. 300 per month.
Income Tax ReturnIncome tax returns need to be filed on or before 30th September 2021 for the Financial year 2020-21.
MCA Form AOC-4The registered private limited companies must file MCA Form AOC-4 on or before 30th November 2021 for the FY2020-21. Failure to file AOC-4 will attract a penalty of Rs. 200 per day of default or delay.
MCA Form MGT-7It is necessary to file MCA form MGT-7 on or before 31st December 2021 for FY2020-21. Failure to file MGT-7 attracts a penalty of Rs.200 Per day of default or delay.
DIN eKYCAll the directors of the company must be filed for the DIN eKYC or DIR-3 eKYC. In DIR-3 eKYC, the Director must provide a unique personal mobile number and a personal email address. There’s a penalty of Rs. 5000 in case of failure to file DIN eKYC.
Hold Annual General MeetingFor a private limited company, it is mandatory to hold an annual general meeting once a year. Companies are required to keep their AGM within six months from closing the Financial year.
Director’s reportPreparation of the Directors report will be done with all the information required under Section 134.
 

How to file Income tax returns for proprietorship firms?

Proprietorship tax returns are to be filed every year unless there is an exemption. As mentioned before, the proprietor and the proprietorship firms are considered as one single person. Two forms are to be filed depending on the nature of the proprietorship.

  • Form ITR-3

    This form should be used to file Income tax if the proprietorship firm is run by a Hindu Undivided Family (HUF) or by any proprietor.

  • Form ITR-4

    The proprietorship firm uses this form for proprietorship tax filing under a presumptive tax scheme. This is done to reduce the burden of compliance of small businesses.

The business income of the person has been added to the payment of the proprietor himself. This way, the business taxes become the personal taxes of the proprietor. The proprietor is still entitled to all tax deductions offered to individuals or Hindu Undivided Family.

Is it necessary for Proprietorship Firms to File Income Tax Return?

Under the Income Tax Act, all proprietors below the age of 60 are required to file an Income tax return if the total income is more than Rs. 3 Lakhs.

In the case of proprietors over the age of 60 years are required to file income, but below 80 years, then income tax filing is mandatory if the total income exceeds Rs. Three lakhs.

Proprietors over the age of 80 years and above must file the proprietorship tax returns if the income exceeds Rs. 5 lakhs.

If the proprietor files an income tax return before the deadline, losses, if any, in the business would be allowed to be carried forward. The deduction under sections 10A, 10B, 80-IA, 80-IAB, 80-IB, and 80-IC cannot be permitted unless the proprietorship income tax return has been filed on or before the due date.

The statutory audit compliances are carried to determine whether an organization provides accurate details of the financial position by examining the bank balances, bookkeeping records, and financial transactions.

  • A statutory auditor of the company is appointed.
  • The auditors of the company will finalize annual accounts.

The Private Limited Companies must file the annual accounts and returns disclosing the details of its shareholders, directors, etc., to the companies’ registrar.

As a part of the annual filing, the following forms are to be filed with the ROC:

Form MGT-7 (Annual returns) must be filed within 60 days of holding the annual general meeting.

Form AOC-4 (Financial statements) is to be filed by a private limited company within 30 days with the balance sheet and the statement of profit and loss account and Director report.

It is necessary to hold a meeting of the shareholders once every year within six months from the financial year’s closing.

AGMs are held for approval of financial statements, declaration of dividends, appointment or re-appointment of auditors, commission, remuneration of directors, etc.

The meeting is held during business hours on a day that is not a public holiday. It shall occur at the registration of the company or the city, village, or town in which the registered office is situated.

It is mandatory to conduct the first meeting of the Board of Directors of a company within 30 days of incorporation of the company.

There should be four board meetings held every three months in which a minimum of 2 directors or 1/3 rd of the total number of directors, whichever is greater, are required to be present.

Further, the meeting’s discussion needs to be drafted and recorded in the minutes of the meeting and maintained at the company’s registered office.

A notice should be intimidated seven days in advance about the date and the purpose of the meeting.

The Director has to disclose details about his directorship in other companies every year. This can be done by giving a declaration in writing to the company every year.

  • Quarterly payment of the advance tax
  • Filing of the Income Tax returns
  • Tax audit (mandatory in case the turnover or gross receipts of a business exceeds Rs. One crore in the previous year relevant to the assessment year.
  • Filing of the Tax Audit report.

Besides the annual filings, there are various other compliances that need to be compiled with on occurrence of any event in the company.

Here are specific instances of such events:

  • Change in the authorized capital or the paid-up capital of the company.
  • Allotment of new shares or transfer new shares
  • giving loans to other companies
  • giving loans to directors
  • Appointment of managing or whole-time Director and their payment
  • when a bank account is opened or closed, or there is a change in the signatories of a bank account.
  • if there is an appointment or change of the statutory auditors of the company

It is necessary to file different forms with the registrar for all such events within a specific period. In case of missing out on this, additional fees or penalties might be levied. Hence, it is necessary to meet such compliances on time.

In case if a company fails to comply with the rules and the regulations of the Companies Act, then the company and its members who default shall be punishable with a dine for the period of which the default is continuing.

In case there is a delay in annual filing, additional fees are required to be paid. Hence, it is always better to fulfill the compliances on time.

Assessment of Partners

  • After the firm pays the tax, no tax will be payable by the partners on the share of income from the firm.
  • Interest amount or remuneration etc. received by a partner will be taxed as ‘Business or Professional Income’, excluding the amount disallowed in the hands of the firm being more than limits laid down in S. 40(b) and from A.Y. 2004-05 amount disallowed in the event of any failure as mentioned in S. 144 or non-compliance of S. 184.
  • The partner’s share (including a minor admitted for the benefit of the firm), in the income of the firm is not included in computing his total income i.e. his share in the total income of the firm shall be exempt from tax under section 10(2A) of the Act.
 

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