A Private Limited Company has become the preferred choice of business structure for startups as it is the only structure that can be funded by investors. A Private Limited Company has more compliances when compared to Partnership firms and LLP but they aren’t very tedious as they used to be. In this article, we have explained, in simple language about mandatory compliances of a Private Limited Company.
Note: These compliances have to be done irrespective of the turnover of the Private Limited Company and irrespective of the fact that it has any transactions or has even opened a Bank Account. In other words, these compliances are MANDATORY.
1. KYC of Directors (DIR-3 KYC)
Form DIR-3 KYC is a form every Director of a Private Limited Company holding a Director Identification Number (DIN) has to file. Form DIR-3 KYC needs to be filed every year on or before 30th April.
There is a penalty of ₹ 5000 for every year a director fails to files these forms.
2. Statutory Audit
A Private Limited Company has to get its books audited every year. This audit is conducted under the Companies Act, 2013 (Yes, every law has a different process for Audit!) The due date for this is on or around 5th September as once the Audit is done, the Signed Financial statements are sent to shareholders along with the Notice of the AGM. The due date for holding the AGM is 30th September. As an AGM requires a 21-day clear notice it is wise to complete the Audit on or before 5th September.
3. Annual General Meeting
Every Private Limited Company is required to hold an Annual General Meeting on or before 30th September every year. Also, 21 days prior notice is required to be given to shareholders for the AGM.
Note: A maximum gap of 15 months is allowed between 2 AGMs
The penalty for not holding an AGM is ₹ 100000 and ₹ 5000 per day till the AGM is not held.
4. Filing Of Financial Statements (Form AOC-4)
Every private Limited Company should file its Financial Statements (Balance Sheet, Profit & Loss Account, Auditor’s Report, Director’s Report, etc.) in Form AOC 4 within 30 days of holding the Annual General Meeting. As the last date for holding the AGM is 30th September, automatically the due date of this form becomes 30 days from 30th September which is 30th October.
In case of default in filing Form AOC-4, a penalty of ₹ 100 per day will be imposed for default. Entrepreneurs, please ensure you file Form AOC-4 on time as there is no upper limit on the penalty you may end up paying. We have seen companies end up paying lacs and lacs in penalties.
5. Filing of Income-tax return
Every Private Limited Company has to file Income Tax Returns every year. It must be filed by the company on or before 31st October. Earlier, the due date for filing Income Tax Returns was 30th September which has been now revised to 31st October from FY 20-21 onwards. Form ITR 6 is the form that is used to file the Income Tax return for Companies.
|E- Filing Date||Total income Below ₹ 5,00,000||Total income Above ₹ 5,00,000|
|Within Due date (31st October)||Nil||Nil|
|After Due date to 31st December (i.e. After 31s October till 31st December)||₹ 1,000||₹ 5,000|
|Between 1st January to 31st March||₹ 1,000||₹ 10,000|
6. Filing Of Annual Return (Form MGT-7)
Every Private Limited Company should file an Annual Return in Form MGT-7 within 60 days of holding an AGM. This form contains reporting relating to shares issues, capital increased during the year, shareholder details etc.
In case of default in filing the annual return, a fine of ₹ 100 per day will be imposed for default. Like Form AOC-4, there is no upper limit on the penalty you may end up paying so make sure you file this form in time.
A private limited company must hold a minimum of 4 Board Meetings every year. Board meetings are meetings between the directors where they discuss important issues concerning the company. Note: The gap between the two meetings shall not be less than 120 days. Thus, it is a good practice to hold a Board meeting every quarter to comply with these provisions. This is NOT an annual compliance but a quarterly/regular compliance.
We have covered only Annual Compliances which are mandatory even if there are NO transactions in the year. We are still, for ease of use, covering the other Compliance which may apply to a Private Limited Company based on its transactions.
1. TDS Payments and Returns
TDS refers to tax deducted at source. A person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such a specified payment. Also, they are required to remit the TDS deducted to the government and file returns for TDS remitted.
We have written an extensive article about TDS covering applicability, due dates, penalties here.
2. GST Returns and Audit.
If a Private Limited Company has a GST Number then it needs to file Monthly returns in GSTR 3B, Quarterly or Monthly returns in GSTR 1, and Annual Returns in GSTR 9. GST Audit will apply to a Private Limited Company if its turnover exceeds ₹ 2cr. Please refer to the below table for Due dates of these forms.
|GSTR 1||11th of Next month|
|GSTR 1 ( Quarterly)||31st of the month following the quarter Example- For 1st quarter due date will be 31st of July|
|GSTR 3B (Turnover more than ₹. 5 Crore)||20th of Next month|
|GSTR 3B (Turnover up to ₹ 5 Crore)||22nd of Next month (Having a principal place of business in states of Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana and Andhra Pradesh, the Union territories of Daman and Diu, Dadra and Nagar Haveli, Puducherry, Andaman, and the Nicobar Islands and Lakshadweep) 24th of Next month (Having a principal place of business in states of Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha, the Union territories of Jammu and Kashmir, Ladakh, Chandigarh, and Delhi)|
|GSTR 9 & 9C||31st December after the end of the financial year ( Example for FY 2020-21 due date is 31 December 2021).|
3. Audit under Income Tax Act (Tax Audit)
Audit under the Income Tax Act, 1961 i.e. Tax Audit is mandatory if the turnover exceeds 1 crore. To read more about tax audits you can read our article here.
4. Auditor Appointment (Form ADT-1)
Form ADT-1 is a form used to appoint an Auditor in the Company. Post the second year, it needs to be filed once in 5 years. This form needs to be filed within 15 days of holding the AGM in which the Auditor is being appointed.
Note: There is no requirement to File Form ADT-1 in the first year of Incorporation of the Company.
Maintaining a Private Limited Company is cumbersome but becomes smooth when you hire trained professionals to handle your Company. We, at Business Guru, have a team of professionals comprising of CAs and MBAs who can manage all the above compliance so that YOU can concentrate on your Business. You can contact us here to handle the above compliances!