Annual Compliance Requirements for Private Limited Companies and LLPs in India

In India, managing a firm entails following legal and regulatory frameworks in addition to strategic operations. Meeting yearly compliance requirements is essential for Private Limited Companies (PLCs) and Limited Liability Partnerships (LLPs) in order to preserve legal standing, stay out of trouble, and build company credibility. For both Private Limited Companies and LLPs, this guide describes the essential compliance standards, due dates, fines, and advantages of maintaining compliance.

Annual Compliance for Private Limited Companies

A Private Limited Company (Pvt Ltd) is one of the most favored business structures in India due to its benefits like limited liability and a separate legal entity. However, these advantages come with specific compliance obligations.

Key Compliance Requirements for Private Limited Companies

Annual General Meeting (AGM)

  • 1. Requirement: Conduct an AGM within six months from the end of the financial year.
  • 2. Due Date: Usually by September 30th.
  • 3. Agenda: Approval of financial statements, reappointment of auditors, and review of the annual report.

Filing of Financial Statements (AOC-4)

  • 1. Requirement: Submit the balance sheet, profit & loss statement, and cash flow details to the Registrar of Companies (RoC).
  • 2. Due Date: Within 30 days of the AGM.
  • 3. Penalty: ₹100 per day for delayed filing.

Annual Return Filing (MGT-7)

  • 1. Requirement: File the company’s annual return, detailing directors, shareholders, and other essential information.
  • 2. Due Date: Within 60 days of the AGM.
  • 3. Penalty: ₹100 per day for delay.

Income Tax Return
(ITR-6)

  • 1. Requirement: File the company’s income tax return for the financial year.
  • 2. Due Date: By September 30th (or November 30th for audited companies).
  • 3. Penalty: ₹1,000 to ₹10,000 depending on the delay.

Director’s Report

  • 1. Requirement: A summary report signed by the board, detailing the company’s financial performance and key highlights.
  • 2. Due Date: Presented during the AGM.

Director KYC (DIR-3 KYC)

  • 1. Requirement: Directors with a valid Director Identification Number (DIN) must complete KYC annually.
  • 2. Due Date: Before September 30th.
  • 3. Penalty: ₹5,000 for non-compliance.

Auditor Appointment (ADT-1)

  • 1. Requirement: Notify RoC about the appointment or reappointment of auditors.
  • 2. Due Date: Within 15 days of the AGM.

Annual Compliance for LLPs (Limited Liability Partnerships)

LLPs offer the dual advantages of a partnership’s flexibility and a company’s limited liability protection. While compliance requirements for LLPs are relatively relaxed, adherence is still essential.

Key Compliance Requirements for LLPs

Statement of Account and Solvency (Form 8)

  • 1. Requirement: File a financial statement declaring the LLP’s solvency status.
  • 2. Due Date: By October 30th each year.
  • 3. Penalty: ₹100 per day for delays.

Annual Return Filing (Form 11)

  • 1. Requirement: Submit details about the LLP’s partners, capital contributions, and management changes.
  • 2. Due Date: By May 30th.
  • 3. Penalty: ₹100 per day for delays.

Income Tax Return (ITR-5)

  • 1. Requirement: File the LLP’s annual income tax return.
  • 2. Due Date:
  • i. July 31st for non-auditable LLPs.
  • ii. September 30th for LLPs requiring audits.
  • 3. Penalty: ₹1,000 to ₹10,000 depending on the delay.

Statutory Audits

  • 1. Requirement: A statutory audit is mandatory if the LLP’s turnover exceeds ₹40 lakh or its capital contribution exceeds ₹25 lakh.
  • 2. Due Date: Same as the income tax filing deadline.

Partner KYC (DIR-3 KYC)

  • 1. Requirement: Designated partners must complete KYC annually.
  • 2. Due Date: By September 30th.
  • 3. Penalty: ₹5,000 for non-compliance.

Comparison: Private Limited Company vs LLP Compliance

Compliance Requirement

Private Limited Company

LLP

Annual Return Filing

MGT-7 (60 days after AGM)

Form 11 (May 30th)

Financial Statement Filing

AOC-4 (30 days after AGM)

Form 8 (October 30th)

Income Tax Return Filing

ITR-6 (September 30th)

ITR-5 (July 31st/September 30th)

Auditing

Mandatory for all companies

Turnover above ₹40 lakh

Director/Partner KYC

DIR-3 KYC (September 30th)

DIR-3 KYC (September 30th)

AGM Requirement

Mandatory

Not required

Statutory Compliance

More stringent and documentation-heavy

Less stringent

Benefits of Staying Compliant

  • Avoid Penalties and Legal Issues: Timely filings prevent hefty fines and government interventions.
  • Builds Credibility: Compliance boosts trust with stakeholders, investors, and financial institutions.
  • Facilitates Growth: Easier access to funding and seamless business operations.
  • Maintains Legal Standing: Prevents deactivation or legal complications with RoC.

Conclusion: Private limited companies are subject to more stringent laws, including frequent filings and required annual general meetings, although LLPs are exempt from these requirements. Both organizations must, however, guarantee prompt compliance in order to stay out of trouble, preserve their reputation, and foster company expansion.

Consulting professionals for accurate and timely filings is highly recommended to navigate these legal obligations effectively.