Compliances for Newly Incorporated Company

Compliances for Newly Incorporated Company

Given below are brief descriptions of certain compliances, a newly incorporated private limited company needs to make within a certain time frame:

Appointment of statutory auditor:

Within 1 month of the incorporation, a Board Meeting has to be convened to appoint the statutory auditor. Before making such appointment, the proposed auditor has to confirm that the appointment if made, will be within the limits prescribed under Section 141(3)(g) of the Companies Act, 2013. After appointment, the auditor has to be informed. The auditor will have to file ADT-1 within 30 days of receiving the intimation of appointment with the Registrar of Companies (ROC).

Allotment of shares:

The subscribers to the Memorandum of Association are the first shareholders of the company and they will have to be issued share certificates in the first board meeting. As the shares are allotted at the time of subscription to the MOA, Form 2 is not required to be filed with the ROC.

Business Registrations:

Depending on the nature of business of the company, there are certain other business registrations required to be done in addition to the company incorporation:

  • Applying for Permanent Account Number (PAN)
  • Tax Account Number (TAN) for deducting and remitting the Tax deduction at source
  • Goods and Service Tax Registration, when the business involves provision of supply– there is a basic exemption, where if, the Aggregate Turnover from sale of goods or providing services is less than Rs.40 lakhs and Rs.20 lakhs for Special category states then, no registration is required.
  • Import Export Code is required if the company is engaged in importing / exporting.
  • Trade License from the local authority

Click here to know more about various labor law compliances to be made.

Commencement of Business:

A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless-

(a) a declaration is filed by a director within a period of 180 days from the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and

(b) The company has filed with the Registrar a verification of its Registered Office as provided in Section 12 (2).

The declaration under section 10A by a director shall be in Form No, lNC-20A and shall be filed as provided in the Companies (Registration Offices and Fees) Rules, 2014 and the contents of the said form shall be verified by a company Secretary or a chartered Accountant or a cost Accountant in practice.

Provided that, in the case of a company pursuing objects requiring registration or approval from any sectoral regulators such as the Reserve Bank of India, Securities and Exchange Board of India, etc., the registration or approval, as the case may be from such regulator shall also be obtained and attached with the declaration.

On going Compliances for a company:

Companies Act:

Every company has to file certain forms with the Registrar of Companies for changes made or decision of the board of directors. The following are the due dates for such forms:

Click here to know more about various compliances to be made under Companies Act.

Income Tax Act:

The income tax act makes responsible the payer of income of any person to deduct the prescribed percentage of income as Tax Deduction at Source and pay the balance amount to the recipient of such income. Thus, the tax is deducted at the source of income itself. The following are the rates of TDS and the respective threshold limits for different types of payments to residents:

Section  Nature of Payment Threshold Limit (RS) Tax (%)
194 Deemed Dividend 10
194A Other Interest for other entities > 5,000 10% if PAN is furnished or else 20%
194C Contracts to Transporter, who has provided a valid PAN for Individuals / HUF If such payment > 30,000 or aggregate of such payment in a FY >1,00,000 1
194C Contracts to Transporter, who has provided a valid PAN for others If such payment > 30,000 or aggregate of such payment in a FY >1,00,000 2
194H Commission or Brokerage > 15,000 5
194I Rent of Plant & Machinery > 240,000 2
194I Rent of Land, Building, Furniture, etc > 240,000 10
194J Professional or Technical Fees > 30,000 10
194J(1) (ba) Any remuneration or commission paid to director of the company > 30,000 10

Click here to know more about TDS Rates, due dates regarding TDS under Income Tax Act.

Goods and Services Tax (GST):

The Goods and Services Tax (GST) is a value-added tax, levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services. Businesses whose aggregate turnover exceeds Rs. 40 lakhs and Rs.20 lakhs for Special category states, then it is mandatory to register as a normal taxable person.

Every statute requires the registered person to file the return in such format and within such time as may be prescribed in the specific statute.

GSTR-1 requires the taxpayer to furnish details of outward supplies or sales by 11th of the following month.

GSTR-3B requires furnishing monthly return by 20th of the  following month.

Composition Scheme :

Composition Scheme is a simple and easy scheme under GST for taxpayers. Small taxpayers can get rid of tedious GST formalities and pay GST at a fixed rate of turnover. This scheme can be opted by any taxpayer whose turnover is less than Rs. 1 crore. In case of North-Eastern states and Himachal Pradesh, the limit is  Rs 75 lakhs.

As per the CGST (Amendment) Act, 2018, a composition dealer can also supply services to an extent of ten percent of turnover or Rs. 5 lakhs, whichever is higher.Turnover of all businesses registered with the same PAN should be taken into consideration to calculate turnover.

The following are the conditions to be satisfied to opt for Composition Scheme:

i. The taxpayer has to mention the words ‘composition taxable person’ on every notice or signboard displayed prominently at their place of business and on every bill issued.

ii. No Input Tax Credit can be claimed by a dealer opting for composition scheme.

iii. A composition dealer cannot issue a tax invoice. This is because a composition dealer cannot charge tax from their customers.

iv. They need to pay tax out of their own pocket. Hence, the dealer has to issue a Bill of Supply.

The following people cannot opt for the scheme-

  • Manufacturer of ice cream, pan masala, or tobacco;
  • A person making inter-state supplies;
  • A casual taxable person or a non-resident taxable person;
  • Businesses which supply goods through an e-commerce operator.

Payroll Compliances: 

Various compliances are to be made under different labor laws like Professional Tax, Provident Fund, Employee State Insurance etc., and click here to know more about compliances to be made under various labour laws.

RMC Services

RMC facilitates businesses by undertaking areas of statutory compliances like filing of periodical returns of Income Tax, Goods and Service Tax etc. This gives the freedom to the promoters of the business in concentrating on the key areas of expertise of the management and helps the organizations to follow various statutory provisions to avoid any non-compliance.