All In One Compliances for a Business Entity Registered in India
Maintenance of Books of Accounts Under Income Tax Act, GST Act & Companies Act
Books of accounts including vouchers and receipts are required to be maintained under different statutory laws – Income Tax Act, Companies Act 2013 and GST Act. Books to be maintained, retention period and compulsion requirements are different under all the 3 laws. While running a business, maintaining books of accounts is essential. The Tax Department needs them, the bank or your investor might ask for them. Outsource your book keeping function and let professionals manage your business financial reporting.
Under Income Tax Act
If the sale/turnover/gross receipts from the business or profession is more than Rs. 25,00,000 or the income from business or profession is more than Rs. 2,50,000 in any of the 3 preceding years, then books of accounts will be compulsorily maintained.
Following professions are covered under this provision –
- Technical consultancy
- Interior decoration
- Authorised Representative (one who charges fees for representing someone before tribunal or any authority)
- Film artist (producer, editor, actor, director, music director, art director, dance director, cameraman, singer, lyricist, story writer, screenplay or dialogue writer and costume designers.
- Company secretary
Thus, if the above-mentioned professions have an income of more than Rs. 2,50,000 in any of the 3 preceding years, they need to maintain books of accounts. In case of a new profession also, if the income is expected to be more than Rs. 2,50,000, the professionals should maintain books.
Books of Accounts as per Rule 6F
- Cash Book
- Copies of bills or receipts
- Daily cash register with details of patients, services rendered, fees received and date of receipt (persons carrying on medical profession)
- Details of stock of drugs, medicines, and other consumables used (persons carrying on medical profession)
If the income isn’t more than Rs. 2,50,000 in any of the 3 preceding years or not expected to be more than Rs. 2,50,000 in case of a new profession, then also books should be maintained. However, books, in this case, haven’t been specified – so any books can be maintained but it should be such that ATO can calculate the income.
For how long should the books be maintained?
Books should be maintained for a period of 6 years from the end of the relevant year.
Under Companies Act
Every company has to maintain books of accounts, at the registered office or any office that board of directors may decide. If the company is maintaining books at an office other than the registered office, it has to intimate the same to RoC. The company can maintain the accounts electronically also.
Books of accounts to be maintained
- Cash flow statement
- Records of sales and purchases,
- Records of assets and liabilities
- Items of cost
- Deeds, vouchers, writing, documents, minutes, and registers whether in physical or electronic mode
For how long should the books be maintained?
Books should be maintained for a period of 8 years from the end of the relevant financial year.
Under GST Act
Every registered person has to maintain GST records at the principal place of business.
Records to be maintained
- Production or manufacture of goods
- Inward and outward supply of goods or services or both
- Stock of goods
- Input tax credit availed
- Output tax payable and paid and
- Other particulars as may be prescribed
For how long should the records be maintained?
Books and records should be maintained for 6 years from the last date of filing of the annual return (31st December) for that year.
Tax Deducted at Source (TDS) Compliances
TDS or Tax Deducted at Source is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments.
Usually, the person receiving income is liable to pay income tax. But the government with the help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance from the payments being made by you.
The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit of the amount already deducted and paid on his behalf. TDS Compliances are mandatory all the types of business constitutions.
Goods & Services Tax Compliances
A ‘taxable person’ under GST, is a person who carries on any business at any place in India and who is registered or required to be registered under the GST Act. Any person who engages in economic activity including trade and commerce is treated as taxable person.
‘Person’ here includes individuals, HUF, company, firm, LLP, an AOP/ BOI, any corporation or Government company, body corporate incorporated under laws of foreign country, co-operative society, local authority, government, trust, artificial juridical person.
GST Registration is mandatory for-
- Any business whose turnover in a financial year exceeds Rs 20 lakhs (Rs 10 lakhs for North Eastern and hill states).
[Note: If your turnover is supply of only exempted goods/services which are exempt under GST, this clause does not apply.]
- Every person who is registered under an earlier law (i.e., Excise, VAT, Service Tax etc.) needs to register under GST, too.
- When a business which is registered has been transferred to someone/de-merged, the transferee shall take registration with effect from the date of transfer.
- Anyone who drives inter-state supply of goods
- Casual Taxable Person
- Non-Resident Taxable Person
- Agents of a supplier
- Those paying tax under the reverse charge mechanism
- Input service distributor
- E-commerce operator or aggregator
- Person who supplies via e-commerce aggregator
- Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person
**e-commerce sellers/aggregators need not register if total sales is less than Rs. 20 lakh. Notification No. 65/2017 – Central Tax dated 15.11.2017
GST return is a format where a taxpayer registered under the Goods and Services Tax (GST) law has to file for each registration separately. Also, the number of GST returns to be filed will be based on the type of taxpayer, such as regular taxpayer, composition dealer, e-commerce operator, TDS deductor, non-resident taxpayer, Input Service Distributor(ISD) etc. Usually, a regular taxpayer has to file two returns per month (GSTR-1, GSTR-3B) and an annual return (GSTR-9/9C) for each GST registration separately.
HR & Payroll Compliances for Employees
Organization Adhering to Minimum Wages
Minimum Wages come under the Minimum Wages Act, 1948. The minimum wage rates are given by both the Central Government and the State Government. The wage rates vary from the employment, sector, and type of employee.
According to this act, the employer is responsible to pay wages at least every month on a timely basis. Wage period may be fixed according to the convenience of the employer on a daily, weekly or monthly basis.
The Provident Fund allows the employees to save some part of their income. The Provident Fund is an amount of funds accumulated through regular and monthly contributions made by an employee and their employer.
According to EPFO (Employee Provident Fund Organization) rules and regulations, any company which has 20 or more employees should register for Provident Fund. If the company fails to comply with EPFO rules and regulations, then it will be charged with heavy penalties.
Registration of Company for ESIC (Employees’ State Insurance Corporation)
The ESIC social security scheme brings reasonable healthcare to employees and their family members. As per the ESIC Act, all the companies consisting of more than 20 employees whose monthly salary falls under Rs.21,000 should register under the Act.
So, if the company falls under the ESIC Act compliance then the Employees CTC needs to be updated including the ESIC employer and employee contribution.
Including Gratuity in Employee CTC (Cost to Company)
According to the Payment of the Gratuity Act, 1972, Gratuity is applicable to all the establishments such as NGO's, hospitals and educational institutions with 10 or more employees. As gratuity is a fixed contribution from the side of the company, it is shown as part of the CTC. Thus, making Gratuity as part of the employees CTC is mandatory.
According to the Income Tax Act, 196, TDS (Tax Deducted at Source) deduction is the means of indirect tax collection. This TDS rule gives the authority to employers to deduct a specific amount of tax before full payment to the employee. TDS rule is applicable to all the employees falling under the Income Tax Slab.
Thus, these required TDS deductions have to be made before the payroll is run. Same as TDS deductions, Professional Tax is also collected from the monthly salaries by the employers. Failure to collect or pay professional taxes will lead to penalties. Professional Tax varies from state to state.
ROC - MCA Filings & Compliances
(Applicable only for Private Limited, LLP, Section-8 & OPC)
Every company and LLP has to comply with all compliances after the completion of each financial year. Mainly, it includes an audit of the books of accounts, filing of income tax return and annual forms with MCA.
Following are the forms to be filed with MCA
|For every person who has allotted DIN||Within 30 days from the availability of the form for F.Y 2018-2019 (30th June of immediate financial year)||Rs. 5000/-|
|Annual Return||30th May 2019 (within 60 days of the end of financial year)||Rs. 100/- per day till the date of filing of the form|
|Statement of Account & Solvency||30th October 2019||Rs. 100/- per day till the date of filing of the form|
In the case of non-filing, MCA may levy penalties on the LLP and to its partners’. Also, MCA may issue notice for striking off the LLP.
|DIR-3 KYC (Annually)||For every person who has allotted DIN||Within 30 days from the availability of the form for F.Y 2018-2019 (30th June of immediate financial year)||Rs. 5000/-|
|For every company other than Government company having outstanding receipt of money or loan other than deposits from 1st April 2014 to 22nd January 2019||22nd April 2019 (within 90 days from the date of notification)||Additional fees|
|Declaration of Commencement of Business for companies incorporated on or after 2nd November 2018||within 180 days from the date of incorporation of a company||Additional fees|
|Form INC-22A (One time)||Every company registered on or before 31st December 2017 to tag company as ACTIVE- (Active Company Tagging Identities and Verification||25th April 2019||Rs. 10,000/- and company will be marked as “ACTIVE- non-compliant”|
|For every specified company who get supplies of goods or services from MSME||Within 30 days from the availability of the form on MCA portal||Form is not available|
|For every specified company who get supplies of goods or services from MSME||31st October 2019 (April – September) 30th April 2020 (October – March)||Form is not available|
|Form ADT-1 (Annually)||Appointment of Auditor||Within 15 days from the conclusion of AGM||Additional fees|
|Filing of financial statements of the company||Within 30 days from the conclusion of AGM||Rs. 100/- per day till the date of filing of the form|
|Filing of annual return of the company||Within 60 days from the conclusion of AGM||Rs. 100/- per day till the date of filing of the form|
*It is not the exhaustive list; a company may need to file other forms as applicable to it.
A company must fulfil all the compliances within the due date to avoid late filing fees. The directors of the company may also liable for non-compliance and thus for penalties.
Be compliant with TAXAJ; file all the forms with MCA without waiting for the due dates to avoid consequences.
Income Tax Compliances & Filings
Even if you don't meet this threshold, it's a good practice to file or e-file your income tax return. An income tax return is an important document you must produce at the time of availing a home loan, as it reflects your financial discipline and prosperity as well as shows your capacity to repay a loan.
If you are planning to go abroad for higher studies, or are about to take up a job outside of India, you'll need at least three years' filed income tax returns to show as proof of income. People processing your visa application may request for your ITR documents to evaluate your financial health, which in return shows that you can support yourself on your own in their country.
-Details about all the bank accounts you've held in the given financial year is mandatory.
-Income proofs like current salary details, income from investments (like FD's, savings bank account) etc.
-Information about all the deductions you've claimed under Section 80.
-Tax payment information such as TDS and advance tax payments.
Audit & Assurance
We at Team TaxaJ assist our clients with an in-depth analysis of their operations and advise them on critical risk areas and possible opportunities for improvement. With our integrated approach to internal audit we help them boost performance and add value to their operations.
Our dedicated team of experienced and certified professionals assist our clients to understand the various aspects of internal audit and customise audit techniques as per client requirements to conduct the audit of internal financial controls over financial reporting. There are a number of types of Audit those are applicable on a business entity depending upon the turnover and constitution of the business.
As a brief recap, an audit examines your financial records and transactions to verify they are accurate. Typically, audits look at your financial statements and accounting books to compare information. You or your employees may conduct audits. Or, you might have a third party audit your information (e.g., IRS audits).
Many business owners have routine audits, such as once per year. If you are not organised or don’t keep thorough records, your audits might take more time to complete. Types of audits can vary from business to business. For example, a construction business might conduct an audit to analyse how much they spent on a specific project (e.g., costs for contractors or supplies).
Overall, audits help ensure your business is operating smoothly. So, what are the various types of audit?
- Statutory Audit
- Income Tax Audit
- GST Audit
- Internal Audit
- External Audit
- Forensic Audit
- Financial Audit
- Operational Audit
- Compliance Audit
- Information Systems Audit
- Payroll Audit
- Pay Audit