A private limited company existing as a Startup should follow a number of compliances laid down by the regulatory and statutory bodies to survive. These include filing of taxes and other returns, holding board meetings and other meetings, maintaining statutory books, etc., and they are not limited only to these. When you begin a startup it involves a lot of effort and cost, hence it is not worth wasting the hard-earned money in paying penalties to the Government for non-compliance.

Adhering to the compliances that are laid down by the Government is very mandatory to ensure that business stays in existence for a longer period of time. The following compliance is necessary as it will help Startups to get funding from Government, can apply for Government tenders, and will avoid being marked as a dormant company. It will also be saved from being shut down.

We the tax consultant in Chennai have pulled down major compliance requirements for startups in India and have compiled them together and put it in a nutshell. Go through the article thoroughly to get an intense knowledge about tax compliances for startups.

Various laws to comply are as below:

  • Income Tax Act compliance
  • GST compliance
  • Labor law compliance

INCOME TAX ACT COMPLIANCE:

Not compiling to the Income Tax Act, will invite unnecessary penalties. If you forget to file Income Tax, a heavy penalty will be laid for non-filing or late filing. In case of too much legal actions will be taken.

Auditor appointment:

It is necessary to abide by provisions that are mentioned in the Companies Act, 2013 once your startup gets registered as an Indian company. The foremost process is the Auditor appointment. Within 30 days of incorporation in the first board meeting, the first statutory auditor must be appointed. Subsequent auditors can be appointed for 5 years in Annual General Meeting. For a 5-year appointment Form, ADT-1 is filed. After that every year in AGM, Shareholders ratify the Auditor but filing ADT-1 is not required.

Board meeting:

The first meeting must be held within 30 days of incorporation. Minimum 2 meetings must be held once in each half calendar year. A minimum gap of 90 days is a must between 2 meetings (can be ignored if there are more than 2 meetings held during the year).

Annual General Meeting:

One Annual General Meeting must be held. Minimum gaps of 15 months are required between 2 Annual General Meetings.

Filing E-forms:

E-form MGT-7 must File Annual Return within 60 days of holding the Annual General Meeting for the period 1st April to 31st March.

E-form AOC-4 Director’s report along with financial statements must be filed. i.e Balance Sheet along with Statement of Profit and Loss Account.

Form MBP- 1 In each Financial Year every Director of the Company in the first meeting of the Board of Directors needs to disclose his interest in other entities by filling the form.

Form DIR – 8 E In each financial year every Director of the company has to file with the company disclosure of non-disqualification.

Director’s report:

Covering all the information required for Small Company under Section 134 Directors’ Report is to be filed.

GST COMPLIANCE:

Every company that is selling goods and services in India must have GST registration and must file GST every financial year even though they have not made any sales in any month or year. If already possessing a GST registration, then GST must be filed annually or monthly.

  • If the yearly turnover exceeds Rs 2 Crores Annual GST must be filed.
  • Registration on crossing exempted turnover of Rs. 20/10 lakhs
  • If the turnover crosses Rs 1.5 Crores Monthly returns else quarterly returns
  • Annual returns
  • If in case the value of invoice exceeds Rs 50 thousand for transportations of the goods then EWAY bill must be produced for transportation

LABOUR LAW COMPLIANCE:

Based on the number of employees in your company, there are three major labor laws applicable:

Provident fund:

If more than 20 employees are working in your company, then a provident fund should exist. Your company must get registered under Provident fund and returns must be filed. Every month along with the share of the employer a certain amount must be deducted from the employee’s salary and must be paid to the Government. Later, a return must be filed, and never neglect to pay PF.

ESI:

A health insurance and social security scheme available for the workers in India is Employees’ State Insurance. According to the ESI ACT 1948, this fund is managed by the State Insurance Corporation for employees.

Professional Tax:

Professional tax will be levied upon all employees who earn through any medium. The calculation may differ from state to state but limited to Rs. 2500 per year.

Click here to know the simple tips on filing income tax return