Private Limited Company Compliances & Filings
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.
A end to end hand holding for your annual requirements is what we have in this plan. TAXAJ will assist you in matters like drafting, appointing, filling and much more.
It Usually takes 5 to 7 working days.
- Secretarial services of preparing board resolution, post AGM
- Yearly filing of MGT-7, AOC-4 for Pvt Ltd Company
- Disclosure of Interest by director (Form MBP-1)
- Assistance in appointment of Auditor, if required
- Companies want to comply to the Annual Compliance as mandated my ROC/MCA
- Purchase the plan
- Share the documents/details as requested by us.
- We shall prepare the documents as required & get signed by you.
- Prepare the form as applicable & file it.
- Bank Statement of the Company along with mentioning nature & party to whom paid or received (If not already audited & needs to be audited by us)
- Shareholders & Shareholding Details of the company. (Including any transfer of shares, if any)
- Bank Account Number & IFSC of All Active Bank Accounts.
- Resignation Letter from Previous Auditor & Challan of Form ADT-3, if any
- DSC Tokens of the Directors.
- Email & Contact Number of the Company
- Copy of MoA, AoA, COI
- Copy of board resolution
- List of shareholders with holdings
- Details of board composition
- Last year's tax return
- Particulars of penalties or compounding offences (if applicable)
Compliances Explained for a Private Limited Company
Compliances for a Private Limited Company in brief:
After incorporation of any kind of business type in India there are few major kind of compliances to be done and few optional or as on applicable basis, therefore here we shall be discussing both types of compliances in brief. Let us dive into the Compliances for a Private Limited Company in India
| Compliances | Description | Nature | Due Date | Link |
|---|---|---|---|---|
| Commencement of Business (INC 20A) | 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. 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. | Mandatory | Within 180 days from Incorporation | File Now |
| Statutory Auditor Appointment | 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. | Mandatory | Within 30 days from Incorporation | File Now |
| KYC of Directors – Form DIR – 3 KYC and Web KYC of all Directors | All 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. | Mandatory | 30th September | File Now |
| Disclosure of Directors Interest by Directors – Form MBP-1 | Every Director of the Company in First Meeting of the Board of Director in each Financial Year shall disclose his interest in other entities. Directorship of other company Partnership firm where he/she is partner Shareholding of more than 2% in other Company List of relatives of Director. | Mandatory | First Board Meeting | |
| Disclosure of Non- Disqualification by Directors – Form DIR-8 | Every Director of the Company in each Financial Year will file with the Company disclosure of non-disqualification. It is declaration that Director was not disqualified to act as Director during the previous FY | Mandatory | Every first Board Meeting of the of relevant Financial year | |
| Delay in Payment to MSME Vendor: Form MSME – 1 | Company has to file this return half yearly in respect of pending payments to MSME vendors as at end of half year. All outstanding dues of more than 45 days payable to Micro or Small Enterprises suppliers. | Optional | Half yearly Return April to Sep – 30th October October to March – 30th April | File Now |
| Return of Deposit: Form DPT-3 | Return of deposits that companies must file to furnish information about deposits and/or outstanding receipt of loan or money other than deposits. Mandatory Auditor certificate : – if the Form is filed “return of Deposits” or “return of Deposits as well as Exempted Deposits. | Mandatory | 30th June of Next Year | File Now |
| Circulation of Financial Statement & other relevant Documents | Company will send to the members of the Company approved Financial Statement, Directors’ Report and Auditors’ Report at least 21 clear days before the Annual General Meeting.. | Mandatory | 21 Clear Days before the AGM | |
| Directors’ Report | Preparation of the Directors report will be done with all the information required under Section 134. | Mandatory | 21 Clear Days before the AGM | File Now |
| Notice of AGM | Include following agenda where shareholders’ approval are required; appointment of Auditors, (if term expires) Directors (if appointed during the year/ Rotation of Director). ETC as and when required event based. MD and WTD require to be re-appointed after expiry of every five years by the Shareholders. | Mandatory | 30th September of Next Year | File Now |
| Appointment/Resignation/Change in Designation – Form DIR-12 of Director | If there is change in designation of Director at the AGM or Appointment or Resignation of Director. Regularization of Additional Director If company wants to appoint additional director as director, then it shall regularize the person as director in General Meeting by passing Shareholder Resolution. File form DIR-12 for Change in Designation of Director along with ordinary resolution within 30 days of AGM. | Mandatory | Within 30 Days of Meeting | File Now |
| Maintenance of Statutory Registers. | Company will maintain the following mandatory Registers: Register of Director, Registers of Director Shareholding, Registers of Members Registers of Transfer Registers of Related Party transaction etc. Other register as per companies act, 2013 | Mandatory | Every Quarter | File Now |
| Board Meetings – 173 & SS-I | Every Company shall hold a minimum number of FOUR meetings of its Board of Directors every year in such a manner that maximum gap between the two meetings should not be more than 120 (One hundred twenty) days. Notice of Board Meeting must be given 7 days prior to the meeting. Notice can be delivered either by hand, through registered post or electronic means. | Mandatory | Every Quarter | |
| Notice of AGM 101 & SS-II | Every Notice of the Annual General Meeting will be prepared as per Section 101 of the Companies Act, 2013 and Secretarial Standard – II. | Mandatory | ||
| Income Tax Return | Income tax returns need to be filed on or before 30th September 2021 for the Financial year 2020-21. | Mandatory | 31st October | File Now |
| MCA Form AOC-4 | The 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. | Mandatory | 29th October or within 30 days from the annual general meeting for the FY | File Now |
| MCA Form MGT-7 | It 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. | Mandatory | 30th November or within 60 days from the annual general meeting for the FY | File Now |
| Hold Annual General Meeting | For 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. | Mandatory | 6 Months from End of Financial Year | File Now |
| Employees Provident Fund (EPF) | EPF is Applicable when Total Number of Employees in an Organisation exceeds 20. | If Applicable | 15th of Every Month | File Now |
| Employees State Insurance (ESI) | ESI is Applicable when Total Number of Employees in an Organisation exceeds 20. | If Applicable | 21st of Every Month | File Now |
| Food License | FSSAI is applicable when a organisation deals into food products that falls under FSSAI Ambit of Registration. | If Applicable (Check Applicability) | File Now | |
| Professional Tax | Applicable in Certain States | If Applicable (Check Applicability) | 15th of Every Month | File Now |
| Import Export Code | For Export of Goods or Services | If Applicable | April | File Now |
| Letter of UnderTaking | For Declaration of Proper Tax Payment under GST | If Applicable | File Now | |
| Goods & Service Tax | Either Turnover Limit or Applicability | If Applicable | 11th, 20th of Each Month | File Now |
| Advance Tax Payment | If Tax Due for the year exceeds INR 10,000/- | Optional | Pay Now |
Other Event Based Compliances
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.
Tax Benefits of a Private Limited Company
- Salary to founder or directors: For any person who is the founder or director of the company then the motive of that person is to earn maximum profit. Profit amount is to be taken by the founder of directors in the profit-sharing ratio which is pre-decided as a dividend.
For the purpose of saving tax, directors can receive profit as salary instead of dividend. Salary to founder or directors is an expense of the private limited company.
- Sitting fees to the director: A company may pay fees to the director for attending meetings on the board. Director’s sitting fees should not more than Rs. 1,00,000/- and it is decided by BOD.
It may be claimed as the expense and in hands of the director, it is exempted to the limit provided.
- Preliminary expenses: These are incorporation expenses that are raised before and after the incorporation of the private limited company. These are to be paid by the founder or director of the company in the form of professional charges for the creation of AOA and MOA, fees paid to the registrar, stamp duty, etc.
We can save tax with these expenses if we have proper documentation.
- Rent expenses: The registered address of the company is on rent on the name of the director or name of a relative then this rent may be booked in the books.
So, we can book rent expenses and can take tax benefits freely.
- Capitalizing capital asset and depreciation: If a assets purchase for the company and it’s going to give benefits in creating revenue for more than a year. It is showing as an expense instead of capitalized. After all, it must be shown in the balance sheet instead of the profit & loss statement.
Asset showing in the balance sheet should be depreciated due to its useful life. Hence we can take tax benefits to the ultimate years.
- Salary of family members: Family members or relatives help in doing business works free of cost. As a good tax planner, such expenses must be recorded in the books of the company.
Indirectly the gain has gone into your hands with the exemption of that expense from the taxable income of the company.
- Entertainment expenses: These are general and exciting expenses incurred in celebrating business success with family or partners.
It must be recorded properly in the books of accounts to get a flat 30% discount and save tax at the same rate.
- Director’s vehicle expense: The vehicle is used in the business for traveling and meetings. Not only fuel but also repair and maintenance of the vehicle is charges as business expenses.
For tax benefits required proper documentation and planning then we can save tax 22% to 30%.
- Salary to founder or directors: For any person who is the founder or director of the company then the motive of that person is to earn maximum profit. Profit amount is to be taken by the founder of directors in the profit-sharing ratio which is pre-decided as a dividend.
Income Tax Filing for Private Limited Company
- Tax rate for Domestic Company if Turnover > Rs. 400 Crore.
| Income Slab | % of Tax | Surcharge |
| Upto 1 Crore | 30% | Nil |
| Above 1 Crore but upto 10 Crore | 3,00,000 + 30% | 7% |
| Above 10 Crore | 3,00,00,000 + 30% | 12% |
Health & Education Cess is fixed @4% on all income slab.
- Tax rate for Domestic Company if Turnover < Rs. 400 Crore.
| Income Slab | % of Tax | Surcharge |
| Upto 1 Crore | 25% | Nil |
| Above 1 Crore but upto 10 Crore | 2,50,000 + 25% | 7% |
| Above 10 Crore | 2,50,00,000 + 30% | 12% |
Health & Education Cess is fixed @4% on all income slab.
Tax rate for Foreign Company is @ 40% fixed and Cess @ 4% on total income tax + surcharge.
Non-Compliance
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 fulfil the compliances on time.
