What is annual compliance of company?
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.)
