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Annual Compliance for Private Limited Company

It is very tough to maintain all the Annual Compliance for Private Limited Company, That’s why RegisterKaro is here to help you with all the annual filings of Companies & provide details regarding Company Compliances

Board Meeting Notice & Minutes
General Meeting Notice & Minutes
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An Overview of Annual Private Limited Company Compliance

With the introduction of the Companies Act, 2013 in India, the compliance burden of every Company has increased substantially irrespective of the Company’s nature like Public Limited Company, Private Company, LLP, OPC, etc. To increase transparency in reporting, the SEBI & MCA frequently come out with some new amendments by way of notifications & circulars. Companies must adhere to all the compliances within the specified due dates, any non-compliance often results in heavy penalties. So, it’s a good practice to keep track of the relevant compliances as per the applicable provisions of the Companies Act or SEBI as the case may be. Practically, it is very tough to maintain all the Private Limited Company Compliance, That’s why RegisterKaro is here to help you with all the annual filings of Companies & provide details regarding Company Compliances.

In India, compliance is a vital aspect that has to be taken into account while running a business or a company. It is compulsory to follow all the ROC Compliance to avoid any penalties. All Private Limited Companies in India must maintain annual compliance as per the Companies Act, 2013. Annual Compliance of a Private Limited Company in India is generally independent of the total turnover or the capital amount involved. The ROC compliance for registered Private Limited Companies is compulsory and not being able to follow the Private Limited Company Compliance may result in some serious action on the Company.

Annual Private Limited Company Compliance

An Overview of Annual Private Limited Company Compliance

What are the Benefits of Private Limited Company Compliance in India?

Following are some important benefits of Private Limited Company Compliance in India:

Helps to attract investors: Financial records & compliance are the main points of focus with regard to investors. Before investing in your business, investors check the regularity of filing annual returns on the MCA portal. Hence, regular filing of Private Limited Company Compliance is an important part of getting investors.

Helps to maintain the active status of your company: Filing annual compliance for a Private Limited Company on time is vital to avoid penalties on accounting services. Failure to file may also reduce the business or company status. Furthermore, the Company will also be declared “in-operational” & removed from ROC. Such Companies’ Directors are debarred from all future businesses inIndia.

Credibility: The date of filing Private Limited Company Compliance is shown on the MCA portal. Thus, regularity in filing compliance increases your business credibility, attracting customers, helping obtain Government Tenders & attaining loan approvals.

Provide Financial Assistance: The financial department of a business must meet several standards in terms of taxes and accounting. Failure to meet such standards not only leads to losses but also legal issues.

What are the Benefits of Private Limited Company Compliance in India?

Types of Compliance for a Company Registered in India

Types of Compliance for a Company Registered in India

There are various parts of a business that must be conducted in the correct way, so there are different types of Compliance in Business. Let’s have a look at what they are and what they mean:

External Compliance

This type of compliance refers to following the rules, laws and standards set by the Government to avoid any kind of negative impact on the Company’s Goodwill. The State in which the firm is built public relations and trust & brings transparency to its business. Complying with all the rules makes sure no unnecessary duplication of efforts of resources. External Companies are further divided into 2 different parts:

Regulatory Compliance:

These are some rules and laws passed by some regulatory bodies set up by the Central or State Government. Some of these are listed below:

1. Accounting & Payroll

  • ulArrowAccounting
  • ulArrowEmployee Payroll

2. Assurance

  • ulArrowStatutory Audit
  • ulArrowTax Audit
  • ulArrowInternal Audit

3. Direct Tax

  • ulArrowCorporate Tax
  • ulArrowTransfer Pricing
  • ulArrowWithholding Tax
  • ulArrowExpatriate Taxation

4. Indirect Tax

  • ulArrowCustoms Duty
  • ulArrowGoods and Services Tax (‘GST ‘)

5. Secretarial Compliance

  • ulArrowIn India, Businesses or Companies must comply with secretarial matters cited under the Companies Act & report to the concerned Registrar of Companies.

6. Labour Laws

  • ulArrowAn employer must consider the impact of the Provident Fund, a government-regulated Pension Plan scheme.

7. Corporate Law

  • ulArrowBoard Meeting
  • ulArrowAnnual General Meeting (adoption of financials)
  • ulArrowAnnual Return with the ROC

8. Tax

  • ulArrowCorporate Tax Return
  • ulArrowTax Audit Report
  • ulArrowTransfer Pricing Report
  • ulArrowTDS Returns (Tax Withholding)
  • ulArrowIndividual tax return
  • ulArrowGST Return

8. Compliance

  • ulArrowDeposit of TDS
  • ulArrowDeposit of GST

Statutory Compliances:

These are the rules and laws passed by the Central or State Government. Following is the list of Statutory Rules that a Company must adhere to:

  • ulArrowShops and Commercial Establishments Act (S&E)
  • ulArrowThe Employees Provident Funds and Miscellaneous Provision Act – 1952 (EPF)
  • ulArrowThe Employees State Insurance Corporation Act – 1948 (ESIC)
  • ulArrowThe Professional Tax Act (PT) 1975
  • ulArrowThe Labour Welfare Fund Act (LWF) 1965
  • ulArrowThe Contract Labour (Regulation & Abolition) Act – 1970 (CLRA)
  • ulArrowThe Child Labour (Prohibition & Regulation Act), 1986
  • ulArrowThe Minimum Wages Act-1948
  • ulArrowThe Payment of Wages Act-1936
  • ulArrowThe Payment of Bonus Act 1965
  • ulArrowThe Maternity Benefit Act of 1961
  • ulArrowThe Payment of Gratuity Act 1972
  • ulArrowThe Equal Remuneration Act-1976
  • ulArrowThe Industrial Establishment (N&FH) Act, 1963
  • ulArrowThe Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
  • ulArrowSexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013
  • ulArrowThe Employees Compensation Act, 1923
  • ulArrowThe Industrial Employment (Standing Orders) Act, 1946
  • ulArrowModel Standing Order Only The Industrial Disputes Act of 1947
  • ulArrowThe Apprentice Act, 1961
  • ulArrowThe Interstate Migrant Workmen (Regulation of Employment and Conditions of Services) Act, 1979
  • ulArrowThe Factories Act of 1948
  • ulArrowThe Trade Unions Act of 1926.
External Compliance

Internal Compliance

Internal Compliance

It basically refers to an internally designed set of rules and regulations that the traders, customers, traders, and employees follow to maintain the quality of services or products by the Company or Organisation. These are created and sanctioned by senior experts and are followed by everyone in the Company. Some Internal Compliances are setting up Board of Directors, conducting regular meetings and distributing stocks to shareholders.

Mandatory Private Limited Company Compliance

Following is the mandatory Private Limited Company Compliance:

Appointment of 1st Auditor: The BoDs are required to appoint an auditor within 30 days of Company Incorporation. A Private Limited Company that fails to appoint an auditor is liable to pay a penalty. Further, the Company will not be allowed to start a business. He or She is required to stay in the office till the completion of the 1st Annual General Meeting (AGM).

Subsequent Auditor: This auditor is appointed to monitor the fair dealings of a Company in terms of its financial position. He or She is appointed in the 1st AGM & continues to stay in the same position till the 6th AGM. According to the Companies Act, 2013, a Subsequent Auditor is appointed by the filing Form ADT-1.

AGM (Annual General Meeting): Annual General Meeting or AGM is one of the most vital Annual Compliance for Private Limited Company. At the Annual General Meetings, the Board of Directors of the Company is required to present its true financial position to the shareholders. Annual General Meeting is required to be organized on/before 30th Sep every Financial Year (F.Y.) during working hours of the Company. Also, the Annual General Meeting shouldn’t be held on public holidays or after business hours. It must be held at the registered office after issuance of notice of at least 21 days.

Board Meeting: The 1st Board Meeting is required to be held within 1 month or 30 days of its incorporation. Four Board Meetings are required to be held in each Financial Year. Also, one should note that the gap between 2 consecutive meetings cannot be more than 120 days. Declaration of Board Meetings is to be duly informed to each Director at least 7 days before the meeting date.

Director Disclosure: All Private Limited Companies in India are required to file Form MBP-1 to disclose their interest in other entities or companies annually on the 1st Board Meeting of every year.

Filing of Financial Statements: Every Private Limited Company is required to file their financial statements i.e., Profit & Loss Account and Balance Sheet along with the Director’s Report by filing Form AOC-4 within 30 days of holding the Annual General Meeting.

Annual Returns Filing: Every Private Limited Company in India must file their Annual Returns within a time span of 60 days of holding the AGM. This can be done by filing MCA Form MGT-7. Failure to file Annual Returns levy a penalty from the due date of non-filing.

Director KYC: Directors having DIN or Director Identification Number with active status are required to file DIR-3 KYC yearly as per the Companies Rules. Failure to file Director KYC will lead to inactive DIN status on the MCA portal. Also, remember that no form of Private Limited Company Compliance can be filed if DIR-3 stands deactivated.

Form DIR-8: This form is required to be filed by every Director of a Private Limited Company during their appointment ascertaining that he or she is not disqualified from functioning as a Company’s Director.

Commencement of Business Certificate: This Certificate is required to be obtained by every company within 180 days of Company Incorporation. In case a Company fails to attain this Certificate.

Mandatory Private Limited Company Compliance

Other Annual Compliance for Private Limited Company in India

Following are some other annual compliance for Private Limited Company in India:

Other Annual Compliance for Private Limited Company in India

1: GST returns, monthly, quarterly, and annual

2: Periodic TDS returns

3: Calculation of the tax liability in advance

4: Income tax return filing

5: Report of tax audit filed

6: Submitting semi-annual easy returns

7: Submitting PF returns

8: Professional tax return filing

9: Regulation evaluation and reporting by various laws (Eg. Environment and Protection Act, Competition Act, Factory Act, etc.)

Event-Based Compliance for Private Limited Company

Following is the list of event-based compliance for Private Limited Company:

1: Change in the company’s authorized capital or the paid-up capital of the company;

2: Allotment of new shares or transfer of new shares;

3: Giving loans to other companies;

4: Giving loans to directors;

5: Appointment of managing/whole-time Director & their payment;

6: When a bank account is opened or closed, or there is a change in the signatories of a bank account.

7: If there is an appointment/change of the statutory auditors of the company.

Event-Based Compliance for Private Limited Company

Note: It is vital to file different forms with the Registrar for all such events within a specific period. In case of missing out on this, additional fees/penalties might be levied. Therefore, it is vital to meet such compliance on time.

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What is annual compliance for a private limited company?

Annual compliance refers to the set of legal requirements and filings that a private limited company must complete every year.

What are the key components of annual compliance?

Key components include filing annual financial statements, annual returns, and conducting an annual general meeting (AGM).

When should the annual general meeting (AGM) be held?

The AGM should be held within six months from the end of the financial year.

What is the deadline for filing annual financial statements?

The annual financial statements must be filed within 30 days of the AGM.

What is the deadline for filing the annual return?

The annual return must be filed within 60 days from the AGM.

Can the AGM date be extended beyond six months from the end of the financial year?

Yes, but approval from the Registrar of Companies (RoC) is required for an extension.

Are there penalties for late filing of annual returns?

Yes, late filing attracts penalties, which increase with the delay.

Who is responsible for ensuring annual compliance?

The board of directors and company secretary are responsible for ensuring annual compliance.

Can a private limited company hold its AGM outside the country?

Yes, with approval from the RoC, the AGM can be held overseas.

Is it mandatory for a private limited company to appoint an auditor for annual compliance?

Yes, every private limited company must appoint an auditor.

Can a private limited company apply for an extension for filing annual financial statements?

No, there is no provision for an extension in filing financial statements.

What information is required in the annual financial statements?

The financial statements should include balance sheets, profit and loss accounts, and cash flow statements.

Can the AGM be held virtually?

Yes, as per recent guidelines, AGMs can be conducted virtually.

Can a private limited company change its financial year-end?

Yes, it is possible to change the financial year-end, but it requires approval from the RoC.

Is it mandatory for a private limited company to have a company secretary?

Yes, a private limited company must have a company secretary.

Can the AGM date be postponed due to unforeseen circumstances?

In certain exceptional situations, the RoC may grant an extension for holding the AGM.

What are the consequences of non-compliance with annual filing requirements?

Non-compliance can result in fines, penalties, and even the striking off of the company from the register.

Can a private limited company apply for an exemption from certain compliance requirements?

Some exemptions may be available to small companies, subject to meeting specific criteria.

What records must be maintained for annual compliance purposes?

The company must maintain books of accounts, resolutions, and other relevant documents.

How can I ensure smooth annual compliance for my private limited company?

Engage a qualified company secretary or seek professional guidance to navigate the compliance process effectively.