A Private Limited Company (Pvt. Ltd.) is one of the most famous forms of business entities in India due to its flexibility, limited liability, ease of incorporation, and smooth functioning. However, with the benefits come responsibilities, particularly legal and regulatory compliance. To adhere to these compliances not only ensures smooth business operations but also protects the company from legal penalties and other legal complications, which helps to maintain its credibility, transparency, and confidence in the eyes of stakeholders and other members of the company.
This article will deal with and discuss the key compliances of a Private Limited Company in India that it must fulfill annually and periodically, covering statutory, regulatory, tax-related requirements, and various other elements.
1. Annual Compliances under the Companies Act, 2013
a. Board Meetings
- A company must have a minimum of four board meetings held every financial year.
- The interval between two consecutive meetings should not exceed 120 days.
- For small companies, at least two board meetings are sufficient, with a minimum gap of 90 days between them.
- Minutes of the meetings must be recorded and maintained.
b. Annual General Meeting (AGM)
- Private companies, unless classified as small companies, must hold an AGM every year.
- The first Annual General Meeting must be held within 9 months from the end of the first financial year, and thereafter within 6 months from the end of each financial year, because it is very important to conduct for the better operation of the company.
c. Filing of Annual Returns (ROC Filings)
- Form MGT-7: This form contains the company’s annual return and must be filed within 60 days of holding the AGM.
- Form AOC-4: This form includes the company’s financial statements and must be filed within 30 days of the AGM.
- Failure to file can result in hefty penalties.
d. Director’s Report
- The Board must prepare a report including financial performance, changes in directorship, meetings held, risk management policies, company working, progress report, and other disclosures as required under Section 134 of the Act.
- This report must be attached to the financial statements.
2. Statutory Registrations and Renewals
a. Maintaining Statutory Registers
- Register of Members.
- Register of Directors and Key Managerial Personnel.
- Register of Charges.
- Register of Contracts and Arrangements.
b. DIN KYC
Every Director with a Director Identification Number (DIN) must file DIR-3 KYC annually, usually by 30th September.
c. Company Auditor Appointment (Form ADT-1)
- A company must appoint a statutory auditor within 30 days of incorporation and file ADT-1 within 15 days of the appointment of the auditor.
- The auditor’s term is typically five years, but the company must confirm the appointment at each AGM, because it is very important to mention it.
3. Income Tax Compliance
a. Income Tax Return (ITR) Filing
- A Private Limited Company must file its income tax return using Form ITR-6 annually by 30th September (if tax audit is applicable).
- Companies with a turnover of over ₹1 crore are subject to tax audit under Section 44AB.
b. Advance Tax Payment
- Companies are required to pay advance tax in four installments during the year if their tax liability exceeds ₹10,000.
4. GST Compliances (if applicable)
If a Private Limited Company is registered under Goods and Services Tax (GST), the following compliances apply:
- Monthly/Quarterly Returns: Filing of GSTR-1 and GSTR-3B, either monthly or quarterly, based on turnover.
- Annual Return (GSTR-9): Filing of the GST annual return by 31st December following the end of the financial year.
- GST Audit: Required if turnover exceeds the prescribed threshold.
5. TDS and Other Tax Compliances
- To file quarterly TDS returns using Form 24Q (for salary) and 26Q (for non-salary) as prescribed under the annexure.
- Issue TDS certificates (Form 16/16A) to payees within prescribed timelines.
- Pay TDS to the government within 7 days from the end of the month in which TDS was deducted as per the income.
6. Other Regulatory Compliances
a. Professional Tax (if applicable)
- The professional tax is only applicable in certain states like Maharashtra, Karnataka, etc. It requires monthly or quarterly payment and annual return filings as per the requirements of the specific state procedure and provisions and the laws applicable there in the relevant subject…!
b. Shops and Establishments Act
- The registration under this Act is mandatory, depending on the state of operation, and must be renewed as per local laws.
c. Labour Law Compliance
- The compliance with EPF and ESIC registration is mandatory if the employee thresholds are met as per the requirement.
- The Monthly contributions and returns must be filed accordingly.
Consequences of Non-Compliance
- The monetary penalties may be imposed on the company, its directors, and their stakeholders.
- Disqualification of directors from their respective posts.
- Closure or striking off of the company by the Registrar of Companies due to fault.
- Loss of credibility and investor confidence.
Conclusion
Annual compliance for a private limited company is not just a legal obligation but also a business necessity and requirement for operating a company in a legal manner according to valid procedures. While it may seem overwhelming, especially for startups and small businesses, setting up a reliable compliance system or outsourcing to professionals can streamline the process. The process of regular review, timely filings, and record-keeping not only ensures legal standing but also positions the company for sustainable growth and investment opportunities, which lead to boosting economic growth as well.
Staying compliant isn’t just about ticking boxes—it’s about building a company that’s transparent, accountable, and ready to scale.