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.
Compliance for Private Limited Company
A private limited incorporated under the Companies Act 2013 has to comply with different laws provided by authorities such as the Ministry of Corporate Affairs (MCA), Income Tax Department, GST Departments, etc.
Annual Compliance is all about bookkeeping and accounting, auditing, holding meetings of directors and members, regular filing of annual returns, financial statements, Directors’ KYC, payment of taxes, and other compliances as required from time to time. Every private limited company incorporated in India irrespective of its size and turnover has to carry out annual compliances as applicable to it.
Managing various day-to-day business operations in line with complex corporate and tax laws can be a challenging task for a company. Therefore, it is advisable to carry out various activities under the guidance of a professional to understand the legal requirements and timely fulfillment of the compliances so as to avoid penalties and fines.
What is the Due Date for Annual Compliance for Private Limited Company?
The due date for filing forms and returns with authorities are different for each form and returns. The table below shows the illustrative list of application due dates for the company.
| Purpose of Form | Due Date |
| Form DPT-3 – Return of Deposits | 30th June after the end of the financial year |
| Form DIR-3-KYC – KYC of Directors | 30th June to 30th September |
| Form ADT 1 – Appointment of Auditor | Within 15 days from the date of appointment or Annual General Meeting (AGM)* |
| Form AOC – 4 – Filing of financial statement and other documents with the ROC | Within 30 days from the date of the Annual General Meeting (AGM)* |
| Form MGT-7 or MGT 7A – Filing of annual return with the ROC | Within 60 days from the date of the Annual General Meeting (AGM)* |
| Income Tax Return (ITR) of the Company | 30th September of the relevant Assessment year |
*A company must hold an Annual General Meeting (AGM) within a period of 6 (six) months from the end of the financial year. However, in the case of the 1st AGM, the company can hold the AGM within 9 (nine) months from the end of the first financial year.
Advantages Of Annual Compliance for Pvt Ltd Company
- Avoid Heavy PenaltyCompanies must mandatorily follow statutory compliances under the law. If a company fails to adhere to these compliances regularly or does not file required returns within the specified time period, the government imposes heavy penalties on the company and its directors.Therefore, filing various compliances on time will help the company to avoid heavy penalties, as the cost of non-compliance is always greater than the cost of compliance.
- Attracts Potential InvestorsThe potential investors usually check the financial records and compliance status of the company under various laws, before investing in any company. Therefore, the companies with proper and regular compliance are preferred more by the investors.
- Get easy loan, finance and subsidiesThe company’s credibility and reliability are measured by the financial statements and regularity in compliances. A company with good track record can easily approach government and private organisations for loan, financial assistance, subsidies, tenders, and such other similar purposes based on its established credibility, reliability, and reputation.
- Necessary for Active status of CompanyIf a company fails to comply with the compliance requirements under Companies Act, then apart from heavy penalties the Registrar of Companies (ROC) shall also declare the company as a defunct company and remove its name from the register, after which the company losses its existence and becomes ineligible to carry out further business operations.
Consequences of Non-Compliance by Private Limited Company
Payment of Additional Fees on Delayed Filings
If a company files Form AOC-4 or MGT-7 after the due date, then it shall be liable to pay the additional government fees of Rs. 100 per day per form. For other forms, it shall vary from 2 times to 12 times of the normal government fees, depending on the delayed time period.
Penalty on the Company for default in filing Annual Return and Financial Statement
If the company fails to file financial statement and annual return in Form AOC-4 and MGT-7 within the required time period, then it shall also be liable to a penalty of Rs. 10,000 which shall extend to Rs. 2 lakhs, with further penalty of Rs. 100 for each day.
Penalty on the Officer who is in default in filing Annual Return and Financial Statement
If a company fails to file a financial statement and annual return in Form AOC-4 and MGT-7 within the required time period, then the officer who is in default or the directors shall also be liable to a penalty of Rs. 10,000 which shall extend to Rs. 50,000, with a further penalty of Rs. 100 for each day.
Company liable for Strike Off or Closure by ROC
If the company does not file a financial statement and annual return to the ROC for a period of 2 years and if the ROC believes that the company is not carrying on any business or operation, then it shall send a notice to company/directors and remove its name from the Register of Companies (ROC)
Disqualification of Director
If Company does not file financial statement and annual return for a continuous period of 3 years, then the Directors of such company shall be disqualified from being appointed as Director in any company for a period of 5 years.
Penalty for Not Filing Income Tax Return (ITR)
As per Income Tax Laws, if company files ITR after the due date then a penalty of Rs. 5000 to 10,000 shall be payable by the company. Further, company won’t be able to carry forward or set off your losses to subsequent years.