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Annual Compliance for Private Limited Company

September 9, 2024 by Team Instabizfilings

Annual compliance is crucial for private limited companies as it ensures they stay aligned with legal requirements and maintain good governance standards. By fulfilling annual obligations, such as filing financial statements and updating regulatory records, companies avoid penalties and legal complications. This regular upkeep reinforces credibility with stakeholders, including investors, creditors, and customers. Ultimately, staying compliant fosters trust, enhances operational efficiency, and supports long-term business growth and stability.

Here's a detailed guide on the necessary compliance requirements:

Annual General Meeting (AGM)

Timeline: Must be held within six months from the end of the financial year, typically by September 30th.
Agenda: Approval of financial statements, declaration of dividends, appointment/re-appointment of directors, and appointment/re-appointment of auditors.

Filing of Financial Statements (Form AOC-4)

Purpose: The preparation of the balance sheet, profit and loss account, cash flow statement, and notes to accounts.
Deadline: Within 30 days of holding the AGM.
Attachments:

Balance Sheet
Profit & Loss Account
Cash Flow Statement
Director’s Report
Auditor’s Report
Notice of AGM

Annual Return (Form MGT-7)

Purpose: Filing of the company's annual return, which includes details of shareholders, directors, and other key management personnel.
Deadline: Within 60 days of holding the AGM.
Key Information:

Registered office address
Principal business activities
Details of shares, debentures, and other securities
Details of directors and key managerial personnel

Income Tax Return Filing

Form: ITR-6 for companies.
Deadline: September 30th (unless extended).
Attachments:

Audited financial statements
Tax audit report (if applicable)
Detailed schedules as per Income Tax Act provisions

Statutory Audit

Requirement: Mandatory for every private limited company, irrespective of turnover.
Process: The statutory audit of the financial records of the company is done by a statutory auditor and involves checking of compliance with accounting standards as well as the Companies Act, 2013.

Director’s Report

Contents: Includes details about the company’s operations, financial performance, dividends, reserves, changes in directors, and other significant activities during the financial year.
Attachments: Must be attached with the financial statements and filed with MCA.

Maintenance of Statutory Registers

Registers:

Purpose: To record the company's statutory details as mandated by the Companies Act, 2013.

Minutes of Meetings

Requirement: Maintain minutes of every board meeting and general meeting.
Timeline: Minutes must be prepared and signed within 30 days of the meeting.

Director KYC

Form: DIR-3 KYC
Deadline: September 30th for every director with a DIN allotted on or before March 31st of the financial year.
Purpose: To update the KYC details of directors annually.

Form DPT-3

Purpose: Filing of return of deposits or particulars of transactions not considered as deposits.
Deadline: June 30th every year.
Applicability: Applies to all companies, even if they have not accepted any deposits.

Form ADT-1

Purpose: Intimation of auditor appointment to the ROC.
Timeline: Within 15 days of the AGM.
Frequency: Once every five years, or whenever there is a change in the auditor.

Compliance with MSME Act (if applicable)

Form: MSME Form-1
Purpose: Filing half-yearly returns for payments to Micro or Small enterprises.
Deadlines:

October 31st for the period April to September.
April 30th for the period October to March.

Compliance under GST (if applicable)

Monthly/Quarterly Returns: Depending on the company’s turnover.
Annual Return (Form GSTR-9): Filing of consolidated GST return for the financial year.
Reconciliation Statement (GSTR-9C): Compulsory for the business entity following the business turnover of 2 crores and above.

Form MSME-1

Purpose: Filing half-yearly returns for payments to Micro or Small enterprises.
Deadlines:

April 30th for October to March.
October 31st for April to September.

Other Statutory Compliances

TDS Returns: Quarterly filing of TDS returns (Form 24Q/26Q).
Advance Tax: Paying advance tax in four equal instalments over the financial year.
Employee Provident Fund (EPF) and Employee State Insurance (ESI) Compliance: Monthly payments and returns if applicable.
Professional Tax Compliance: For applicable states.

Secretarial Audit (if applicable)

Applicability: Mandatory for companies with a paid-up share capital exceeding 50 crores or a turnover exceeding 250 crores.
Form: MR-3 (Secretarial Audit Report).

Event-Based Filings

Change in Authorised/ Paid-up Share Capital: Filing of Form SH-7.
Change in Registered Office: Filing of Form INC-22.
Appointment/Resignation of Directors: Filing of Form DIR-12.
Allotment of Shares: Filing of Form PAS-3.

Filing of Board Resolutions (MGT-14)

Purpose: Filing of board resolutions passed by the company’s board of directors.
Applicability: Required for specific resolutions as per the Companies Act, 2013.

LLP Compliance (if applicable)

For companies having LLPs as subsidiaries or partners:

Filing of Form 8 (Statement of Accounts & Solvency)
Filing of Form 11 (Annual Return of LLP)

Audit Compliance

Internal Audit (if applicable): Required for companies with turnover above a certain threshold.
Cost Audit (if applicable): Required for companies involved in manufacturing activities.

Important Deadlines

April 30th: MSME Form-1 for October-March period.
June 30th: DPT-3
July 31st: TDS Return for Q1.
September 30th: ITR filing, Conducting AGM, DIR-3KYC
October 30th: Form AOC-4.
October 31st: MSME Form-1 for April-September period, TDS Return for Q2.
November 30th: Tax Audit Report (if applicable), Filing of Form MGT-7.
January 31st: TDS Return for Q3.

Penalties for Non-Compliance

Late Fees: Penalties for late filings can range from 100₹ per day to more severe penalties for non-compliance with financial filings.
Disqualification of Directors: Non-filing of financial statements or annual returns for three consecutive years can lead to disqualification of directors.
Fines and Legal Action: The company and its officers can face fines and potential legal action for continued non-compliance.

Ensuring timely and accurate compliance is essential for the smooth functioning of a private limited company, avoiding penalties, and maintaining a good standing with regulatory authorities.

The cost of annual compliance for a Private Limited Company in India can vary based on the complexity of the company’s operations, the services required, and the professional fees charged by compliance service providers. Here's a general breakdown of the potential costs:

Basic Compliance Costs

Statutory Audit Fees: 10,000₹ - 50,000₹ (depending on the auditor’s fee and the complexity of accounts).
Income Tax Return Filing (ITR): 5,000₹ - 15,000₹.
Filing Fees with MCA (Form AOC-4, MGT-7): 500₹ - 1,500₹ per form.
Director KYC (DIR-3 KYC): 0₹ to 500₹ - 5,000₹ per director (if done after the due date).
Annual Filing with ROC (Registrar of Companies): 5,000₹ - 15,000₹.
Form ADT-1 Filing: 300₹ - 500₹.

Professional Fees

Company Secretary Services: 10,000₹ - 30,000₹ (for drafting resolutions, preparing minutes, etc.).
Tax Consultant Fees: 5,000₹ - 20,000₹ (for handling tax filings and compliance).
Legal Advisor Fees: 5,000₹ - 20,000₹ (for handling legal compliances).
GST Filing Services: 2,000₹ - 10,000₹ per annum (if applicable).

Additional Compliance Costs

GST Annual Return Filing (GSTR-9): 5,000₹ - 10,000₹.
Cost Audit (if applicable): 20,000₹ - 50,000₹.
Internal Audit (if applicable): 15,000₹ - 40,000₹.
Secretarial Audit (if applicable): 20,000₹ - 50,000₹.
Form DPT-3 Filing: 500₹ - 1,500₹.
LLP Compliance (if applicable): 5,000₹ - 10,000₹ per annum.

Penalties for Late Filing

Late Fees for MCA Filings: 100₹ per day for each form.
Late Filing of DIR-3 KYC: 5,000₹ per director.
Late Filing of Income Tax Return: 5,000₹ - 10,000₹.

Total Estimated Costs

For Small to Medium Companies: 30,000₹ - 1,00,000₹ per annum.
For Larger Companies: 1,00,000₹ - 3,00,000₹+ per annum, depending on the complexity and number of filings required.

Package Offers

Some service providers offer annual compliance packages for private limited companies that cover most of the mandatory filings and compliance tasks, typically ranging from 15,000₹ - 50,000₹ depending on the scope of services.

Other Factors Influencing Costs

Size of the Company: Larger companies with more complex operations may incur higher compliance costs.
Location: Fees may vary based on the location of the company and the professional services available.
Type of Business: Specific industries might have additional compliance requirements, affecting the overall cost.

In summary, the cost of annual compliance for a private limited company can vary widely based on the company's size, business activities, and the professionals engaged for compliance tasks. It's important to budget for these costs to ensure timely and proper compliance, thereby avoiding penalties.

Disclaimer

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