What are the mandatory auditing and compliances, taxations required for a newly Pvt. Ltd. company in India?

Although Private Limited Company is one of the more popular ways of starting a business, there are various compliances which needs to be followed once you continue with your business.

Looking the day to day operations of your business and complying with the corporate laws is a little too much for the entrepreneur. Hence, it is essential to get a professional on board also look after the legal requirements and ensure timely fulfillment of compliances, without levy of interest and penalty.

Statutory Audit Compliances

The chief aim of a statutory audit is almost similar to other audits. This helps find out whether an organization is an exact replica of a financial position as it examines information such as bank balances, bookkeeping records, and other financial transactions. 

 

Annual RoC Filings

Private Limited Companies need to file its Annual Accounts and Returns giving it details of its shareholders, directors and so on to the Registrar of Companies. Such compliances need to be made once in a year.

As a part of Annual Filing, the following forms need to be  ROC:

Form MGT-7 (Annual Return): Every Private Limited Company is required to file its Annual Return within a time frame of 60 days of holding of Annual General Meeting. Annual Return is from the period of 1st April to 31st March.

Form AOC-4 for Financial Statements: Each and every Private Company needs to file the Balance Sheet along with a statement of Profit and Loss Account and the Director Report in this form has to be submitted within 30 days of holding of Annual General Meeting.

Annual General Meeting

Every Private Limited Company needs to go into a meeting of its shareholders once every year within a period of six months starting from the date of closing of the financial year.

The primary agenda of an AGM is including the approval of financial statements, declaration of dividends, and the appointment or re-appointment of auditors and the remuneration of directors, etc.

Board Meetings

 

The First meeting of the newly appointed Board of Directors of a Private Limited Company shall be conducted within days starting from the date of Incorporation of the company.

Further, minimum Four Board Meetings shall be held in a calendar year (a meeting every 3 months). In case of a Private Limited Company which is known as  a “Small Company”, at least two Board Meetings shall be held in a calendar year (one meeting quarterly)

Most of the startups fall within the category of “Small Company” and need to follow  certain compliances such as follows, 

1.       Income Tax Compliances

Calculation and Quarterly Payment of Advance Tax

Filing of Income Tax Returns (Tax is payable at a flat rate of 30% plus Education Cess)

Tax Audit – It is mandatory in case sales, turnover or gross receipts of a business exceed Rs. 1 Crore in the previous year that is relevant to the assessment year.

Maintenance of Statutory Registers and Records

Other Event Based Compliances

Filing of Tax Audit Report

Maintenance of Statutory Registers and Records

Besides Annual Filings, there are various other compliances which need to be done as and when an event takes place in the Company. Instances of such events are:

transformation in Authorised or Paid-up Capital of the Company.

Giving Loans to other Companies.

Giving Loans to Directors

Allotment of new shares or transfer of shares

Loans to Directors

Appointment of taking care of the position of whole time Director and payment of remuneration.

Opening or closing of bank accounts or change in signatories of Bank account.

Change or Appointment of the Statutory Auditors of the Company.

Different forms need to be filed with the Registrar for different events within the specified time periods. In case, it is not done the additional fees or penalty must be levied. Hence, it is mandatory that such compliances are met on time. 

Non-Compliance

If a Company is unable to comply with the rules and regulations of the Companies Act, then the Company and all the responsible officers who are in default shall be punishable with fine.

If there is a delay in any filing, then additional fees are required to be paid, which keeps on increasing as the time period of non-compliance changes.