5 Steps for private limited company registration

The name of the company is the first and foremost decision that a person makes for new company registration. It is the first identity that goes out to consumers or investors that’s why it needs to be unique, desirable and one of its kind to make it stand out of the rest. Therefore, choosing a right name of new private limited company registration becomes extremely important and should be done meticulously.

Post Monthly Annual Compliance Pvt ltd

  • Post:CA Nayani Agarwal
  • October 21, 2020
Company Registration

In a society, everyone needs to comply with some rules and laws, including business organizations. A company/organization needs to adhere to specific rules and regulations before and after its incorporation. These rules are called compliances which are set by the Government or regulatory bodies of countries. In India companies act, 2013 lays down compliances for companies registered in India. Let's look at the rules which a company needs to follow after its incorporation.

Post-Incorporation Compliances (Immediately after Incorporation )

Once a company is incorporated under the Companies Act,2013, the company must meet certain compliances as soon as it gets incorporated. Companies Act, 2013 lays down these compliances, and any failure in adhering to these rules could lead to heavy fines for company' directors or members. Apart from basic compliances such as Applying for PAN, opening a bank account, etc., two substantial compliance are

1. First Auditor Appointment within 30 days

An auditor is a person who handles and maintains the financial records of a company. According to section 139, a company's board of directors must appoint an auditor within 30 days of its incorporation (except in the case of a Government company) and failing to do so, and an Extraordinary general meeting should be called within 90 days for members to appoint an auditor. This auditor will hold office till the first annual meeting of the company.
In the first annual meeting, the company's board of directors is required to appoint a subsequent auditor who will hold the office till the 6th annual meeting.

2. INC 20A - Commencement certificate

Under section 10 of the companies Act 2013, A company must obtain a commencement certificate by filing form INC 20-A within 180 days of its incorporation. The form includes a declaration by subscribers that they have paid their due capital on shares, and a bank statement must be attached as proof for the same. In case the company fails to do so, it is liable to pay a 50000 fine as a penalty.

3. First Board Meeting

Post new company registration, first board meeting shall be held within 30 days from the date of its incorporation .Events of interest disclosure by Directors, authorisation of directors and other important events will be decided in this meeting

Monthly/Quarterly Compliances

After a company is incorporated, during its life span, it needs to comply with some rules monthly related to tax paying, TDS, and Bookkeeping.

1. GST Return filings

In India, a company registered under GST must file GSTIN. It refers to filing all details of credit /debit related to goods and services. A company must file two monthly returns and one annual return if it has a turnover of 5 crore rupees. GSTR -1 has to be filed by the 11th of every month.
If the company has a turnover of fewer than 5 crores, it can opt for quarterly filing of returns under the QRMP scheme. The company can file in 3 ways

  • GSTR QUARTERLY - All types of supply
  • GSTR SAHAJ - Outward supplies – only B2C
  • GSTR SUGAM - Outward supplies - B2C and B2B
2.TDS filing

TDS is an abbreviation for Tax Deducted at the source. It is a method of collecting Tax when the transaction takes place, like salary or insurance payment. TDS is a way of reducing tax evasion in the system. Any company with a valid deduction account number and deducts TDS needs to deposit that Tax each month and file a TDS return quarterly. Payments for which Tax needs to be deducted and return should be filed are -

  • Salary
  • Payment from insurance
  • Income from securities
  • Income from lotteries
  • NSS (national saving scheme) payment

TDS should be deposited to the IT department by the 7th of each month.

3. Book keeping

Bookkeeping refers to the recording of day to day financial transactions of the company, as various tax returns need to be filed monthly; Bookkeeping plays an essential role in these filings, Without accurate financial information, neither tax returns can be filed, nor business can function properly, which is why it is monthly compliance to keep your financials records updated. Every Private limited company has to compulsory maintain books of account as per law.

4. TDS Return filings

The company that has deducted TDS is required to file their TDS return on a quarterly basis and provide detailed transaction entries. After successfully filing the TDS return, they will receive FORM 16/16A and the TDS payment details will be visible in individual 26AS statements, enabling them to claim TDS credit. Failure to file the TDS return on time may result in a penalty of Rs 200 per day.

5. AdvanceTaxes

Quarterly deposits of advance taxes are mandatory. An income estimate is computed for the entire year, and accordingly, payments are made each quarter before the due date. Failure to deposit advance taxes on time will result in accruing interest and incurring penalties

6. Other Monthly Compliance
  • Professional Tax – Some states in India has applicability of PT. PT returns to be filed monthly/annually as per the state applicability
  • Provident Fund – Companies on which PF is applicable has to deposit and file monthly PF Returns. Companies can voluntarily also opt for PF .PF once opted compliance has to be done mandatory.
  • Employee Insurance Scheme (ESI)- Companies on which ESI is applicable has to mandatory deposit and file ESI returns.

  • Annual Compliance

    Rules which the company needs to comply with each year include -

    1. ITR Filing

    Income tax returns should be filed by the company annually. It includes the declaration of income/ expenditure and profit made in the financial year (a part of which needs to be paid as income tax). All companies must file an ITR, and failing to do so may lead to strict actions.
    The due date to file income tax for companies that require tax audits is 30th September of each year.

    2. ROC/ Annual filings

    It is mandatory for any company registered in India to file annual statements after holding an annual general meeting. An AGM is to be held only after the statutory audit is done by the appointed auditor of the company. Under ROC filings, E-forms that need to be filed include -

    • AOC - 4 - Audited financial statements of the company need to be filed using the AOC-4 form together with the directors' report

    A director's report is an important document that includes a summary of the company's activities, directors' responsibilities, financial events, agreements, and various other details related to the company, which provide in-depth information about the company's activities and transparency to stakeholders.

    Documents that should be attached with an AOC - 4 forms are -

    • Balance sheet and P&L statement with notes
    • Cash flow statement
    • Auditor's report
    • Directors report

    The company's director/manager needs to certify this form using a digital signature. The auditor should check it before submitting .company needs to file this within 30 days of conducting AGM, In case a company delays filing of AOC -4. A penalty of 100 rupees per day would be imposed, and in the case of non-filing, the company may have to pay a fine of up to 10 lakh rupees.

    • MGT - 7 - Annual returns of the company need to be filed each year with the help of the MGT - 7 form. The company needs to file it within 60 days of holding the AGM (Annual general meeting should be called before 30th September).

    Documents which should be attached with it are

    • List of shareholders
    • List of debenture holders
    • MGT - 8

    If a company fails to file MGT - 7 within 60 days of AGM, a fine of 200 rupees per day is levied on the company.

    • DPT - 3 – Return of deposits
      It is a mandatory filing obligation for companies to provide essential details regarding their deposits, outstanding loans, and non-deposit transactions. This filing requirement applies to all companies, excluding government companies
    • Auditor Appointment/reappointment – ADT -1
      Every Private company needs to appoint / reappoint auditor every financial year by passing resolutions in the annual general meeting. Practising Chartered Accountant having valid COP can be appointed as auditor of the company
    3. Company/Statutory audit

    It refers to the review of a company's financial transactions and information. This audit is to be done by the auditor who was appointed by the company in AGM, and companies with turnover greater than ten crores also need to file a tax audit report to the department by 30th September. Each year a company needs an audit by a registered auditor to maintain correctness in its books.
    Company audit is vital because an AGM is called only after the company's audit to go ahead with ROC filings.

    4. Dir KYC

    DIR means Director Identification number; It is a unique number given to a director of a company. According to the latest rules, After the end of the financial year, the director needs to file the DIR - 3 KYC form before 30th September on MCA 21 portal.
    This form includes -

    • Personal mobile number and email address of director (which will be verified with OTP)
    • Signature of Director (digital)

    DIR - 3 KYC needs to be certified by practicing CA or CS to ensure the correctness of its details. If the director fails to file DIR -3, his DIN will be deactivated, and a late fee of 5000 rupees will be levied for late filing.

    5. Tax Audit

    Tax Audit Companies subject to tax audit requirements must arrange for their financial accounts to be examined by a Chartered Accountant before submitting their Income Tax Return (ITR). Subsequently, they need to furnish the tax audit report.

    6. GST Annual Return and Annual Audit

    GST Annual Return and Annual Audit Companies with a revenue exceeding 2 crores are obligated to file an annual return and conduct an annual GST audit.

    7. FEMA Compliance

    FEMA Compliance FEMA compliance encompasses activities such as conducting Transfer Pricing Audits and submitting the 3CEB report. This primarily applies when a company engages in transactions with related parties.

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