A fresh look into Statutory Compliance for Businesses in 2018
“Failure to implement good governance procedures has a cost beyond mere – regulatory problems. Companies that do not employ meaningful governance procedures will have to pay significant risk premium when competing for scarce capital in today’s public markets…” – Chairman Committee on Corporate Governance, SEBI
Can businesses focus on value creation by taking care of compliance obligations? Well, the answer is yes, every move with a strategy is the best foot forward – formal compliance frameworks with well structured, documented and demonstrable compliance structures. In this blog, we will be looking into mandatory compliances that businesses, based on the entity type should adhere to.
Private Limited Company:
- Audit of Accounts: Every Private Limited Company is required to prepare its accounts and get it audited by a Chartered Accountant at the end of the Financial Year. The auditor will provide an Audit Report and the Audited Financial Statements which is supposed to be filed with a registrar.
- Filing of Annual Return (Form MGT-7): Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting(AGM). Annual Return will be for the period 1st April to 31st
- Filing of Financial Statements (Form AOC-4): Every Private Limited Company must file its Financial Statements (Balance Sheet and statement of Profit and Loss Account) and Director Report in Form AOC-4 within 30 days of holding of Annual General Meeting.
- Tax Audit: Audit is required in case of the Private Limited Companies having turnover more than 2 Crore.
- Income Tax Returns: The due date for filing income tax return in case of a company where an audit is required is September 30th, 2018 and where the audit is not required, the due date is July 31st
Limited Liability Partnership (LLP):
- Filing of Annual Return in Form 11: Every LLP must file its Annual Return to ROC by 30th May of every year. If the firm fails to file the same, it will have to pay a penalty of INR 100 per day until it is filed.
- Filing of Annual Accounts and Solvency in Form 8: Every LLP must file its Annual Accounts with ROC by 30th Oct 2018. If the firm fails to file the Annual Accounts, it will have to pay a penalty of INR 100 per day until it is filed.
- Tax Audit: A LLP is not required to get its accounts audited unless in case of an LLP whose annual turnover exceeds INR 40 lakhs or whose contribution exceeds INR 25 lakhs. In this case, the accounts must be audited by a Chartered Accountant.
- Income Tax Returns: The due date for filing income tax return in case of an LLP where an audit is required is September 30th, 2018 and where the audit is not required the due date is July 31st
One Person Company (OPC):
- The Annual Return in Form MGT-7: Just like a Private Limited Company, an OPC is also required to file Form MGT-7. This form contains current information about the directors and shareholders of the OPC. The due date of filing the annual return with the relevant ROC is within 60 days from the date of Annual General Meeting.
- The Financial Statements in Form AOC-4: This is to be filed with relevant ROC, on or before 30th October 2018. This form contains information about all monetary transactions and finances made by the OPC in that particular financial year. The annual financial reports contain only the following particulars in case of OPC – Balance Sheet, Profit and Loss Account, Auditor’s Report, and the Consolidated Financial Statement.
- Income Tax Returns in Form ITR-VI: This is to be filed with the Income Tax Department, on or before 30th September2018. Tax audit will be required if the annual turnover of the OPC is more than INR 1 Crore.
- Tax Audit: In case of partnership firm that has a sales turnover exceeding INR 2 Crore, a tax audit is required and it should be performed by a practicing Charted Accountant.
- Income Tax Returns: Income tax return should be filed by a partnership firm by 31st July 2018 if the audit is not required and by 30th Sep 2018 if the audit is required.
- Tax Audit: Even for Sole Proprietorship tax audit is required if the firm’s turnover exceeds INR 2 Crore.
- Income Tax Returns: Sole proprietorship must file income tax return before 31st July 2018(where the audit is not required) and before 30th Sep 2018(where the audit is required).