Manage Compliance

• ROC Filing of Company

What are ROC compliances?

Every Private Limited Company, as per the Companies Act of 2013, needs to inform the Registrar of Companies, popularly known as ROC, regarding every minor or major change in the company’s name, objective of the company, article of association of the company, appointment of directors, appointment of auditors,  passing of board resolution etc. Providing all this information to the registrar of Companies is known as ROC compliance for Private Limited Company. These ROC compliance for Private Limited Companies are of two types which are given below:

• Mandatory ROC Annual Compliances
• Event-based ROC Annual Compliances

• Appointment of Auditor

Appointment of Auditors

After incorporation of a company in the first annual general meeting, an Auditor must be appointed by the Board of Directors. The Auditor will typically hold term till the conclusion of 6th AGM or 5 years. The appointment of an Auditor can also be made for a period of 1 year, renewable at each annual general meeting.

Before the appointment of the Auditor, a written consent along with Certificate must be obtained from the CA, that he/she is eligible for appointment as Auditor of a company and that the proposed appointment is in accordance with the Companies Act.

The appointment of First Auditor of the Company must be completed by the Board of Directors within 30 days of incorporation. In case the Board of Directors fail to appoint an Auditor, the members of the company must be informed. The members will then be required to appoint an Auditor within 90 days at an Extra Ordinary General Meeting. An Auditor so appointed will hold office until the conclusion of 1st Annual General Meeting.

• E-KYC Form of Directors

Requirement to file DIR-3 KYC form Every Director who has been allotted DIN on or before the end of the financial year, and whose DIN status is ‘Approved’, would be mandatorily required to file form DIR-3 KYC before 30th September of the immediately next financial year. After the expiry of the respective due dates, the system will mark all non-compliant DINs against which the DIR-3 KYC form has not been filed as ‘Deactivated due to non-filing of DIR-3 KYC’.

• About GST

GST is known as the Goods and Services Tax. It is an indirect tax which has replaced many indirect taxes in India such as the excise duty, VAT, services tax, etc. The Goods and Service Tax Act was passed in the Parliament on 29th March 2017 and came into effect on 1st July 2017.

In other words, Goods and Service Tax (GST) is levied on the supply of goods and services. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. GST is a single domestic indirect tax law for the entire country.

What is GST return?

GST return is a document that will contain all the details of your sales, purchases, tax collected on sales (output tax), and tax paid on purchases (input tax). Once you file GST returns, you will need to pay the resulting tax liability (money that you owe the government). 

Who should file GST return?

All business owners and dealers who have registered under the GST system must file GST returns according to the nature of their business or transactions. 

• Regular Businesses.
• Businesses registered under the Composition Scheme.
• Other types of business owners and dealers.
• Amendments.
• Auto–drafted Returns.  Tax Notice.

v Income/TDS Return Filing

Definition of Income Tax

Income tax is a tax charged on the annual income of an individual or business earned in a financial year. The Income Tax system in India is governed by The Income Tax Act, 1961, which lays out the rules and regulations for income tax calculation, assessment, and collection. All taxpayers are mandated to submit an Income Tax Return (ITR) every year by respective due dates as per the law to report their income and claim a tax refund if applicable. An income tax return can be filed online or offline on the Income Tax Department’s official website or through verified third-party websites. The Indian Income Tax system also includes various deductions and exemptions that can be used to lower the tax liability for a given financial year.

Who Is Required to Pay Income Tax?

Any individual earning more than ₹ 2.5 lakh annually in a financial year is required to pay income tax to the Government of India. Here are the different types of taxpayers in India:

• Individuals: (Further divided as individuals under 60 years, individuals between the ages of 60 and 80 years, and individuals aged over 80 years)
• Hindu Undivided Family (HUF)
• Association of Persons (AOP)
• Artificial Juridical Person
• Firms
• Companies
• For the purpose of Income-tax Law, an individual may have any one of the following residential statuses:
• Resident and ordinarily resident in India (ROR)
• Resident but not ordinarily resident in India (RNOR)
• Non-resident (NR)
• Under Indian tax laws, the scope of taxation differs as per the residential status of an individual:
• RORs are subject to tax in India on their global income, wherever received
• RNORs are subject to tax in India only in respect to income that accrues/arises or is deemed to accrue/arise in India, or is received or deemed to be received in India, or is from a business controlled from India or from a profession set up in India
• NRs are subject to tax in India only in respect to income that accrues/arises or is deemed to accrue/arise or is received or deemed to be received in India

TDS Return

Individuals whose tax at source on specific income has been deducted and filed with the government are required to file for TDS returns. Typically, such a return is required to be filled within a stipulated period along with essential details related to the tax deduction, the deductor and the deductee, among others. 

Who is Eligible for TDS Return?

Employers and organisations with a valid TAN are qualified for filing TDS returns. Individuals whose accounts are audited under Section 44AB, and hold an office under the government or companies are liable to file online TDS returns every quarter.

It means that the deductor can be – an individual, group of individuals, HUFs, limited companies, local authorities, an association of individuals, partnership firms, etc.

 As per ITA, TDS is filed against these following pay-outs –        Salary income 

• Income on securities
• Insurance commission
• Pay-outs towards NSC
• Earnings generated on winning horse race
• Earnings generated on winning a lottery, puzzles, etc.

 Accounting And Audit

What Is Accounting?

Accounting is the process of recording, classifying and summarizing financial transactions. It provides a clear picture of the financial health of your organization and its performance, which can serve as a catalyst for resource management and strategic growth.

Accounting is like a powerful machine where you input raw data (figures) and get processed information (financial statements). The whole point is to give you an idea of what’s working and what’s not working so that you can fix it.

Why Accounting Is Important

Accounting information exposes your company’s financial performance; it tells whether you’re making a profit or just running into losses at the end of the day.

This information is not just available to you, but also to external users such as investors, stakeholders and creditors who would want to be enlightened about your business, to figure out whether it’ll be a good choice to invest in and what they can expect in returns.

Besides playing a key role in providing transparency for stakeholders, accounting also ensures you make informed decisions backed by data.

Types of Accounting

Accounting can be broken down into several categories; each category deals with a specific set of information, or documents particular transactions. In this section, we discuss four of the most common branches of accounting:

• Financial Accounting
• Managerial Accounting
• Cost Accounting
• Tax Accounting

 Audit

What is Auditing?

Auditing typically refers to financial statement audits or an objective examination and evaluation of a company’s financial statements – usually performed by an external third party.

Audits can be performed by internal parties and a government entity, such as the Internal Revenue Service (IRS).

Importance of Auditing

Audit is an important term used in accounting that describes the examination and verification of a company’s financial records. It is to ensure that financial information is represented fairly and accurately.

Also, audits are performed to ensure that financial statements are prepared in accordance with the relevant accounting standards. The three primary financial statements are:

1. Income statement
2. Balance sheet
3. Cash flow statement

Financial statements are prepared internally by management utilizing relevant accounting standards, such as International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). They are developed to provide useful information to the following users:

• Shareholders
• Creditors
• Government entities
• Customers
• Suppliers
• Partners

Financial statements capture the operating, investing, and financing activities of a company through various recorded transactions. Because the financial statements are developed internally, there is a high risk of fraudulent behavior by the preparers of the statements.

Without proper regulations and standards, preparers can easily misrepresent their financial positioning to make the company appear more profitable or successful than they actually are. Auditing is crucial to ensure that companies represent their financial positioning fairly and accurately and in accordance with accounting standards.

Types of Audits

There are three main types of audits:

• Internal audits
• External audits
• Government audits

Digital Signature Certificate (DSC)

About Digital Signature Certificate (DSC)

The Information Technology Act, 2000 has provisions for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically. This is secure and authentic way to submit a document electronically. As such, all filings done by the companies/LLPs under MCA21 e-Governance programme are required to be filed using Digital Signatures by the person authorised to sign the documents.

 Legal Warning:

You can use only the valid Digital Signatures issued to you. It is illegal to use Digital Signatures of anybody other than the one to whom it is issued.

Certification Agencies:

Certification Agencies are appointed by the office of the Controller of Certification Agencies (CCA) under the provisions of IT Act, 2000. There are a total of eight Certification Agencies authorised by the CCA to issue Digital Signature Certificates (DSCs). The details of these Certification Agencies are available on the portal of the Ministry.

Class of DSCs:

The Ministry of Corporate Affairs has stipulated a Class-II or above category signing certificate for eFilings under MCA21. A person who already has the specified DSC for any other application can use the same for filings under MCA21 and is not required to obtain a fresh DSC.

Validity of Digital Signatures:

The DSCs are typically issued with one year validity and two year validity. These are renewable on expiry of the period of initial issue.

Costing/ Pricing of Digital Signatures:

It includes the cost of medium (a UBS token which is a one time cost), the cost of issuance of DSC and the renewal cost after the period of validity. The company representatives and professionals required to obtain DSCs are free to procure the same from any one of the approved Certification Agencies as per the MCA portal. The issuance costs in respect of each Agency vary and are market driven. However, for the guidance of stakeholders, the Ministry has obtained the costs of issuance of DSCs at the consumer end from the Certification Agencies. The costs as intimated by them are as under: Obtain Digital Signature Certificate

• Digital Signature Certificate (DSC) Applicants can directly approach Certifying Authorities (CAs) with original supporting documents, and self-attested copies will be sufficient in this case. • DSCs can also be obtained, wherever offered by CA, using Aadhar eKYC based authentication, and supporting documents are not required in this case.
• A letter/certificate issued by a Bank containing the DSC applicant’s information as retained in the Bank database can be accepted. Such letter/certificate should be certified by the Bank Manager.

 Closure of Company

Closing a company under the companies act 2013 is a process of liquidation, which is followed when the company has no more assets to pay off its liabilities. The procedure of company closure is governed by the Companies Act, of 2013.

Company closure is a procedure in which the company’s directors can appoint a voluntary liquidator to closing up the affairs of the company. The appointment of a voluntary liquidator does not necessarily mean that all or any part of the assets of the company will be sold at an ‘auction’.  In some cases, it may be desirable for creditors to receive some payment from proceeds from sale rather than having them distributed among shareholders. In such circumstances, it may also be appropriate for creditors to have their claims paid out before distribution takes place. 

Company Closure under the Companies Act

If you wish to move forward with the voluntary company closure then there are some documents that you will require in order to proceed further. The important documents that are required for voluntary company closure: 

• For voluntary closing of companies, the PAN card of that company is required.       A written declaration of the organization’s financial balance is required. 
• A statement of accounts of the company that is being wound up is required.
• A return document in which all the records that are available are explained and reviewed by a chartered accountant.
• An application is also required in the name of the organization which will mention evacuation.