Corporate Compliance

Companies Act, 2013 (For Corporate Governance and Compliance)

The Companies Act, 2013 is the primary legislation governing companies in India. It covers the formation, management, and dissolution of companies. Some key aspects to highlight:

Compliance under the Companies Act, 2013:

Incorporation and Registration:
  • Ensure the company is registered with the Ministry of Corporate Affairs (MCA).
  • Obtain a Certificate of Incorporation, PAN, and TAN.
Board Meetings:
  • A Private Limited Company must hold a minimum of 2 board meetings every year.
  • Notice of the board meeting must be issued at least 7 days prior to the meeting.
  • Maintain minutes of the meeting and ensure it is recorded in the minutes book.
Annual General Meeting (AGM):
  • Private companies are not required to hold an AGM. However, the company must still maintain an annual filing with the MCA.
Annual Filing with MCA:
  • File Form AOC-4 for the Annual Accounts.
  • File Form MGT-7 for the Annual Return.
  • These must be filed within 30 days from the date of the AGM, or within 60 days if the AGM is not held.
Director Compliance:
  • Directors should update their Director Identification Number (DIN).
  • KYC of directors needs to be updated every year (via DIR-3 KYC).
Maintaining Statutory Registers:
  • Registers like the Register of Members, Register of Directors, Register of Charges, and others need to be maintained.
Secretarial Compliance:
  • Depending on turnover and other criteria, a company might need to appoint a Company Secretary for compliance.
Auditor Appointment:
  • A private limited company must appoint an auditor in its first board meeting, and the term is valid for one year.
  • Annual audit of financial statements is mandatory.
Filing of Financial Statements:
  • Balance Sheet, Profit & Loss Statement, and Cash Flow Statement should be filed after getting approval from the board.
Tax Audit:
  • Companies with an annual turnover exceeding ₹1 crore need to undergo a tax audit under Section 44AB of the Income Tax Act.

Income Tax Act, 1961 (For Tax Compliance)

The Income Tax Act, 1961 governs income tax in India. Companies, individuals, and other entities must adhere to its provisions for tax filings and payments.

Compliance under the Income Tax Act, 1961:

Income Tax Return (ITR) Filing:
  • A Private Limited Company must file its ITR every year by September 30th of the subsequent year (for companies whose financial year ends on March 31).
  • The return must be filed online with the Income Tax Department.
Advance Tax Payments:
  • Companies are required to pay advance tax in four installments during the financial year (June, September, December, and March).
  • If the tax liability is ₹10,000 or more in a year, the company must pay advance tax.
Tax Deducted at Source (TDS):
  • The company must deduct TDS on payments like salaries, contractors, and other specified services.
  • TDS Returns need to be filed quarterly (Form 24Q, 26Q, etc.).
  • The TDS deposited with the government needs to be done within the due date.
Transfer Pricing Compliance:
  • If the company has international transactions or specified domestic transactions, transfer pricing documentation must be maintained, and Form 3CEB must be filed.
Tax Audit (if applicable):
  • As mentioned above, a tax audit is mandatory if the company’s turnover exceeds ₹1 crore in a year.
GST Compliance (If applicable):
  • If the company is registered under GST, it must file monthly or quarterly GST Returns (GSTR-1, GSTR-3B, etc.).
  • GST payments should be made by the 20th of the following month.
Filing of Form 15CA/15CB (For foreign remittance):
  • If the company makes a foreign remittance, Form 15CA/15CB must be filed online with the Income Tax Department.

GST Act, 2017 (For Tax Compliance)

The GST Act, 2017 governs the Goods and Services Tax in India, which is levied on the supply of goods and services. All businesses that meet the turnover threshold must register for GST and comply with its provisions.

Key Compliance Areas:
  • GST Registration: Businesses must register for GST if their aggregate turnover exceeds the threshold limit (₹40 lakhs for goods, ₹20 lakhs for services).
  • GST Returns: Businesses need to file monthly, quarterly, and annual returns (e.g., GSTR-1 for outward supplies, GSTR-3B for summary returns, GSTR-9 for annual returns).
  • GST Invoices: Proper documentation is required for every transaction, including issuing GST-compliant invoices.
  • Input Tax Credit (ITC): Businesses can claim credit for GST paid on purchases to offset the output GST.
  • GST Audit: Companies must get their GST records audited if their turnover exceeds the prescribed limit.
  • Penalty for Non-Compliance: Companies can be penalized for late filing, incorrect claims, and failure to comply with GST regulations.