Compliance Requirements for Limited Liability Partnership (LLP)
All Annual Compliance in India LLPs are required to comply with certain regulations and file statutory filings with the Government each year. Some of the basic compliance requirements are pointed out as follows.
- Books of Accounts: Every Annual Compliance in India LLP should maintain proper books of accounts at their Registered Office either on Cash or Accrual basis under the Double Entry System of bookkeeping. LLPs with a turnover of more than 40 lakhs or capital over 25 lakhs shall audit their accounts by a Chartered Accountant. Penalty: Any LLP not complying with the provisions shall be punishable with a fine of not less than 25,000 and a maximum of 500,000. Any designated partner could be punished with a penalty of minimum 10,000 and a maximum of 100,000.
- Annual Return Filing: An LLP has to file 2 types of returns in a financial year – FORM 8 & FORM 11.
- FORM 8:
- Must be filed within 30 days from the end of 6 months of the Financial Year.
- Must be signed by 2 designated partners.
- Must be certified by a Chartered Accountant / Company Secretary / Cost Accountant.
Form has 2 parts: Part A- Statement of Solvency Part B- Statement of Accounts, Statement of Income & Expenditure Penalty for not filing the form is Rs.100 per day until it is complied.
- FORM 11:
- Contains details about the number of partners, the total number of partners, total contribution received by all partners, details of a body corporate as partners, and a summary of partners.
- Should be filed within 60 days from the closure of the Financial Year, i.e., May 30.
- An LLP cannot be wound up or closed until the Annual Returns are filed.
- FORM 8:
- Income Tax Return Filing: The Income Tax Rate applicable for an LLP registered in India would be 30% on Total Income. In addition to the Income Tax, a surcharge will be levied at 12% if the income exceeds Rs. 1 crore. Note: Surcharge is subjected to marginal relief. The amount of income tax and surcharge shall further be increased by health and education cess at 4% of such income and surcharge.
- Alternate Minimum Tax for LLP: Similar to the income tax applicable for a company, an LLP is also subject to Alternate Minimum Tax. An Alternate Minimum tax of 18.5% of adjusted total income is applicable for LLP. Hence, income tax payable by LLP cannot be less than 18.5 per cent (increased by income tax surcharge, education cess, and secondary and higher education cess).
- Deadline for LLP Tax Filing: The deadline for LLP tax filing in India is July 31st if tax audit is not required.
- LLP Tax Audit Limit: LLPs whose turnover exceeded Rs. 40 Lakh or whose contribution exceeded Rs. 25 Lakh are required to get their accounts audited by a practicing Chartered Accountant. The deadline for tax filing for LLP required to obtain an audit is September 30th.
- Procedure for LLP Tax Filing: LLPs must file income tax return using Form ITR 5. Form ITR 5 can be filed online through the income tax website using the digital signature of the designated partner. After filing LLP tax return, it is advisable for the taxpayer to print two copies of Form ITR-V.
- LLP Tax Payment: LLP tax payment can be made in physical mode through designated banks or through e-payment mode. LLPs that are required to get their accounts audited are required to pay tax through e-payment mode only.
Compliance Requirements of a Private Limited Company
For annual compliance in an Indian Private Limited Company, there are significant legal and regulatory requirements that the Government expects to be fulfilled. These can be outlined as follows:
- Board Meeting: It is required to conduct at least 4 Board meetings in a year, ensuring at least one meeting in every quarter. Quorum is 1/3rd or 2 Directors, whichever is greater. The meetings need to be logged, and the signed minutes must be maintained at the Registered Office.
- Annual General Meeting (AGM): The AGM is a meeting of the shareholders where Financial Statements are approved, dividends are declared, and Auditors are appointed. The AGM needs to be held in the city where the registered office of the company is situated.
- Annual Filing of Forms: Several annual forms, in addition to the annual financials, need to be filed. The information is detailed and includes details about shareholdings, directors, financials, etc. All these forms are required to be certified by a practicing Chartered Accountant or practicing Company Secretary. Companies with paid-up share capital in the range of INR 1 million to 50 million are required to file a Compliance Certificate from a practicing Company Secretary.
- Maintenance of Statutory Registers & Minutes Book: Registers such as Register of Members, Register of Directors, Register of Contracts, Register of Charges, etc., and Minutes Book are to be maintained at the Registered office of the Company.
- Income Tax Returns: Any Private Limited Company registered in India must file its Income Tax Returns on or before 30th September for the Financial Year. Non-compliance may result in a penalty of Rs.10,000.
- Approval and Signing of Financial Statements: The financial statement shall be approved by the Board of Directors and signed by 2 Directors, out of which one shall be the managing director and the chief executive officer, if he is a director in the Company, Chief Finance officer, and the Company Secretary of the Company, wherever they are appointed, for submission to the auditor for his report thereon.
- Filing of Financial Statements or Financial Results: Every Company is required to file its Financial Statements within 30 days of its Annual General Meeting with the Registrar of Company in E-FORM AOC -4, which shall be digitally signed by at least one Director and is required to be certified by a Company Secretary in Practice/ Chartered Accountant in Practice/ Cost Accountant in Practice if the Company is not a Small Company.
- Filing of Annual Return: It is mandatory for every company to file its Annual Return with the Registrar of Companies within 60 days of the Annual General Meeting in E-FORM MGT-7, which shall be signed by at least one Director and is required to be certified by a Company Secretary in practice if the Company is not a small company.
Compliance Requirements of One Person Company (OPC)
The following are the post-incorporation compliance requirements for annual compliance in an Indian OPC:
- Name Board: All companies, including an OPC, are required to paint or affix the name of the company and the address of its registered office outside every office or place where it conducts business.
- Company Rubber Stamp: A round rubber stamp bearing the name of the company and a straight rubber stamp bearing the name of the company along with the designation of the authorized signatory are required for executing various legal documents like Board Resolutions, bank account opening forms, cheques, etc.
- Letterhead: The name and registered office address of the OPC must be printed on all letterheads, invoices, notices, and other official documents of the company.
- OPC PAN Application: After incorporation, it is mandatory for any legal entity, including an OPC, to obtain a PAN CARD. The application can be done online to receive the PAN allotment letter, which should be signed by the OPC Director and sealed with the rubber stamp of the entity before being couriered to the National Securities Depository Limited (NSDL).
- Opening OPC Bank Account: As per the Reserve Bank of India’s KYC norms, the following documents are required for opening a current account for an OPC:
- Self-attested copies of OPC Certificate of Incorporation
- MoA of OPC
- AoA of OPC
- Resolution to open a bank account for the company
- Copy of PAN allotment letter
- Copy of utility bill
- Identity proof of the Director
- Appointment of Auditor: A practicing Chartered Accountant shall be appointed as the Auditor of the firm by the Director within 30 days of incorporation.
- OPC Annual General Meeting: In the case of an OPC where there is only one director on the Board of Directors, a resolution by one Director is sufficient and should be passed and entered into the minutes book. The signed and dated resolution by the Director of an OPC is deemed to be the meeting of the Board of Directors for all purposes under the Company’s Act. Note: Provisions relating to quorum for meetings of the Board do not apply to an OPC where there is only one Director on its Board of Directors.
- OPC Financial Statements:
- Balance sheet as at the end of the financial year
- Profit & Loss Account
- Cash Flow statement
- Statement of changes in Equity (if applicable)
- Explanatory note forming part of any document
Compliance Requirements of a Public Limited Company
For annual compliance in an Indian public limited company, the following are the main and most important compliances:
- Annual Return in Form MGT-7: This form contains the latest information about the directors and shareholders of the public limited company and is to be filed with the relevant ROC within sixty days of holding the Annual General Meeting. In case the total paid-up capital of the public limited company equals or exceeds Rs. Ten Crore, or its annual turnover crosses Rs. Fifty Crore, then there will arise the requirement of filing Form MGT-8 (Certification of Annual Return) also, within sixty days from the end of the financial year.
- Financial Statements in Form AOC-4: Form AOC-4 shall be filed with the associated ROC within 30 days of holding the AGM. This form should contain the Balance Sheet, Profit and Loss Account, Director’s Report, Cash Flow Statement, Auditor’s Report, and the Consolidated Financial Statement. Note: Every listed public company in India is required to prepare its financial statements in extensible Business Reporting Language (XBRL).
- Income Tax Returns: Income Tax Returns shall be filed on or before 30th September. Tax audit is compulsory if the annual turnover of the company exceeds Rs.1 crore.
- Secretarial Audit Report in Form MR-3: Every public limited company, whether listed or unlisted, shall submit a Secretarial Audit Report along with the Board Report under the satisfaction of any of the following conditions:
- When the total paid-up capital of the company is greater than or equal to Rs.50 crore.
- Annual turnover is greater than or equal to Rs.250 crore.
- Form MGT-14: Adopted Financial Statements and Director’s Report shall be filed within 30 days of the board meeting of the Public Limited Company.
- Form MGT-15: This form contains a report on the Annual General Meeting (AGM) of the company.
Various compliances under other applicable Annual Compliance in India Laws
Every Public Company is required to comply with
- Labor and Employment Law
- Corporate and Commercial Laws
- Excise and Custom
- Reserve Bank of India
- Intellectual Property Laws
- Pollution Control ACT
- PF and ESI Regulations
- Maritime and Admirality Laws etc.,