What is the Annual Compliance of the Company?

Annual Compliance means a specific set of Compliance that a company has to fulfill post-incorporation to commence and continue its operations. Under the Companies Act 2013, various compliances must be completed every Year. Failure to comply with such Compliance may result in the Company's strike-off and its directors' disqualification. As part of annual Compliance, various returns must be filed with the Income Tax Authority, MCA, GST, etc. This article will look at a company's standard compliances to ensure mandatorily.

Applicability of Annual Compliance

All companies registered in India, like private limited companies, one-person companies, limited Companies, and section 8 companies, must maintain annual compliances like annual returns and income tax returns each Year.

Benefits of Annual Compliance

Raising the Company's Credibility - regularity in Compliance is a significant criterion to measure an organization's credibility.
Attract Investor - Investors also tend to favor companies with regular compliance records.
Maintain Active Status and avoid penalties - Continuous failure in filing the Return turns the company status to default and charges it with heavy fines.

What compliances are to be maintained by the Private Limited Company?

The compliance requirement for Private Limited Companies has changed drastically over the years. Following is the summary of the private limited company compliance. The compliances can be categorized as below:

Registrar related Compliance
Non-Registrar Compliance

Registrar related Compliance

Registrar related Compliance

Company Law Compliances
Declaration of Commencement of Business	Form INC-20A To be filed within 180 days from the date of incorporation
ACTIVE KYC of the Company (for the applicable Company)	Form INC-22A Till 25 April 2019 without a late fine
Directors KYC	Form DIR-3KYC Till 30 April (or the date declared by MCA)
Disclosure of interest in other firms by the directors.	Form MBP-1 must be filed within 30 days of the first board meeting.
Directors' disclosure of not being disqualified	Form DIR-8 Each company director in each financial year must file a non-disqualification report with the Company.
Mandatory Appointment of Auditor	FORM ADT-1 Every Company will have to appoint an Auditor within 15 days of the incorporation. However, Form ADT-1 may be filed post-first company AGM.
Meetings of the Board of Directors	A firm will have to hold a minimum number of four Board meetings. The maximum gap between two sessions is at most 120 days, and a meeting is held every quarter of the Fiscal Year.
Annual General Meeting (AGM)	AGM shall be held within six months from the closing of the financial year (i.e., on or before 30 September every Year) The first AGM of a Firm shall be held within nine months from the financial Year's closure. (I,e, On or Before 31 December)
Annual Return	Company Annual Return should be filed Within sixty days of the date of holding the AGM. The annual return Form MGT-7 should be filed for the period 1 April to 31 March for the respective Year.
Financial Statements	The form AOC-4 is used for filing Financial Statements Within thirty days of holding the AGM. Through form AOC-4

Other Non-RoC Compliances

In addition to the Compliance mentioned above, some of the non-RoC Compliance for private limited companies are:

Payment of periodic dues (GST Liability, TDS, TCS payment, Advance tax, and PTax)
Filing of regular returns –
- Monthly/Quarterly/Annual GST Returns
- Quarterly TDS Returns
- Assessment of advance tax liability
- Filing of Income Tax Returns
- Filing of Tax Audit Report
- Filing of half-yearly ESIC returns
- Filing of PF returns
- Filing of professional tax (PTax) returns

Regulatory assessment and reporting under different acts of law (Eg. Environment and Protection Act, Competition Act, Factory Act, etc.)

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Frequently Asked Questions

Common questions about Annual Compliance Requirements for Indian Companies.

Annual Compliance refers to the set of mandatory compliances that a company must fulfill every year after incorporation to legally commence and continue its operations. This includes filing various returns with regulatory authorities like the Income Tax Department, Ministry of Corporate Affairs (MCA), and GST, among others.

Maintaining Annual Compliance is crucial for a company as it raises its credibility, attracts potential investors, and ensures the company's active status while avoiding penalties for non-compliance. Failure to comply with annual requirements can lead to the company's strike-off and disqualification of its directors.

The Annual Compliance for a Private Limited Company can be broadly categorized into Registrar-related Compliances (e.g., filing annual returns, holding board meetings, and AGMs) and Non-Registrar Compliances (e.g., filing GST returns, income tax returns, and other statutory returns).

Some examples of Registrar-related Compliances for a Private Limited Company include filing the Declaration of Commencement of Business (Form INC-20A), updating Directors' KYC (Form DIR-3KYC), disclosing directors' interests (Form MBP-1), appointing an auditor (Form ADT-1), holding board meetings and AGMs, and filing annual returns (Form MGT-7) and financial statements (Form AOC-4).

Some examples of Non-Registrar Compliances for a Private Limited Company include payment of periodic dues (GST, TDS, TCS, advance tax, and professional tax), filing regular GST returns, filing quarterly TDS returns, assessing advance tax liability, filing income tax returns, filing tax audit reports, filing half-yearly ESIC returns, filing PF returns, and filing professional tax returns.

A Private Limited Company must hold a minimum of four Board Meetings every fiscal year, with a maximum gap of 120 days between two meetings, ensuring that at least one meeting is held in each quarter. Additionally, the company must hold an AGM within six months from the end of the financial year (i.e., on or before September 30th).

A Private Limited Company must file its Annual Return (Form MGT-7) within sixty days of holding the AGM, covering the period from April 1st to March 31st of the respective year. The company must also file its Financial Statements (Form AOC-4) within thirty days of holding the AGM.

Failure to comply with Annual Compliance requirements can have severe consequences for a company, including the company's strike-off (removal from the register of companies), disqualification of directors, and imposition of hefty fines or penalties by regulatory authorities.

Yes, Annual Compliance requirements can vary depending on the type of company, such as Private Limited Companies, One-Person Companies, Limited Companies, or Section 8 Companies (non-profit companies). The specific compliances and their timelines may differ based on the company's nature and applicable laws and regulations.

To ensure proper and timely compliance with Annual Compliance requirements, companies should develop a comprehensive compliance calendar, assign dedicated resources or personnel for compliance management, implement robust internal controls and monitoring systems, and seek professional assistance or guidance from experts in corporate law and taxation, if required.