With an “Ease of doing business”, starting a business in India is way easy, but running it in this competitive world is complex. In such complex environment maintaining data, records and managing compliances is the biggest task that every company have to deal with.
What are Periodic and Routine Compliances?
Generally, compliance means keeping up with the set rules, policies, law or standard. Periodic means timely or on a regular interval, like monthly, quarterly and so on. Thus, periodic compliances mainly refers to recording, maintaining, filing or submitting the necessary documents and informative data timely or in regular intervals.
Whereas regular compliance is primarily concerned with ensuring that the company remains on the right side of the law and ensures due and timely compliances under the concerned law. These matters are which have to be taken care of on a timely basis and with a great care every year.
Compliances might not be productive in nature but are very important for smooth functioning of the company. Hence, managing day to day operations of business along with compliance of corporate laws is taxing. Hereto, we can serve you, with our experience and professional skepticism to understand such legal requirements and ensure timely compliance, without any levy of interest or penalty.
For meeting compliances individually, every company has a unique corporate identification number (CIN) issued at the time of incorporation. To fulfill the compliances with MCA, company uses its CIN. Also, for the purpose of taxation and legalizing the existence of the company, they are issued Tax Deduction and Collection Account Number (TAN) and Goods and Service Tax Identification Number (GSTIN).
List of Periodic Compliance
Below are some of the common periodic compliances which a company has to mandatorily ensure in its routine working:
- Statutory Audit of Accounts: For the purpose of filing the company’s audit report with the registrar, every company shall get its financial statements audited by a Chartered Accountant at the end of every financial year, compulsorily.
- Holding Annual General Meeting: It is mandatory for every private limited company to hold an Annual General Meeting (“AGM”) in every calendar year i.e. January – December. Companies are required to hold their AGM within a period of six months, from the date of the end of their financial year
- Filing of Financial Statements: Every company is required to file its financial statements consisting of balance sheet along with statement of Profit and Loss account, and Director’s Report in the form AOC- 4 within 30 days from the conclusion of AGM.
- Filing of Annual Report: Every company is required to file annual return of for its financial year within 60 days of holding of the AGM.
- Director’s Board of Meeting: All companies are required to hold minimum 4 board meetings each year. Here “year” means calendar year and not financial year of the company. Gap between the two consecutive board meetings shall not be more than 120 days.
- Filing of Tax Audit Report: Company has to conduct a mandatory tax audit in case turnover of the business exceed INR. 1 crore in the previous year, provided if company pays tax under 44AD limit exceed to INR 2 crore.
- Income Tax Compliances:
- Advance tax – payment of a percentage of direct tax calculated on an estimated profit of the company on quarterly basis.
- Goods and service tax (GST) – monthly payment of indirect tax collected / deducted by company
- Tax deducted at source (TDS) – TDS is to be paid monthly
- Tax returns – E-return has to be filed for the taxes paid by the company on their respective due dates for both direct and indirect tax
- Tax Audit: Tax Audit is means review or examining the books of accounts of business organization or individuals for the purpose of computation of income and tax and helps in filing the returns
- Minimum Alternate Tax: Normal tax rate applicable to an Indian company is 30% exclusive of cess and surcharge as applicable, which has been decided to be progressively reduced to 25% by 2019. As per MAT provisions, a company has to pay higher of normal tax liability or liability.
- Other: There are many more compliances which a company needs to fulfill like Certification of Tax compliances (Form 15CA/ Form 15CB), Transfer pricing, etc.
List of Routine Compliance
We have briefed some of the common routine compliances which company has to mandatorily ensure:
- Extraordinary general meeting: Also called special general meeting or emergency general meeting, is a meeting other than a company’s annual general meeting (AGM) that regularly occurs among a company’s shareholders, executives and any other member. Convening and holding a meeting and drafting its minutes is not as easy as it looks like.
- Change in management: It refers to change that happens in director(s) of company that means their removal, resignations or appointment for which there are specific compliances to be fulfilled with the registrar of company.
- Constitutional changes: Any change in name of the company, registered address, place of business, objects of business, financial year, increase/decrease of registered share capitals and so many more is constitutional change.
- Share issuance / transfer: There are certain procedures which are to be complied with while transferring or issuing of shares among the inner groups of the company like directors, employees and so on.
- Other: There are many more events which occur in a company and have obligatory compliances. For instance, voluntary liquidation / deletion of company and place of its business; branch establishment, etc.
We, a Chartered Accountant firm, serve a number of clients who need assistance for various regulatory compliances including setting up business in India, company formation in India, income tax return filling, bookkeeping, accounting, GST and auditing. If you require any guidance for the any professional service, we are here to serve you!
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