It is accordance with the norms of Income-tax Act,1961, every person not entitled to tax audit provision should requires to furnish an Income Tax Return (ITR) for the Financial Year (2018-2019) in the prescribed form and the due date for the same was July 31, 2019, but was extended to August 31, 2019, by the tax department. But in the case of registered companies in India, the filing of ITR is mandatory before September 30th, 2019. In terms of ITA, there are two categories under company tax return filling i.e., domestic company and foreign company.
Domestic Company:
An Indian Company registered with Ministry of Corporate Affairs viz., Private Limited Company, One Ownership Company or Limited Company wherein the income is subjected to tax and the dividends are paid within India.
Foreign Company:
For foreign company/non-residents other than foreign companies, the provisions with respect to the filing of income tax return mention that any company is required to file an income tax return in India if it has earned, accrued or received any money in India.
The definition of 'company' includes foreign companies. Thus, all the companies, which have had any transaction in which they have received/accrued payment from an Indian entity and tax has been deducted on such payments should file an income tax return for such income.
Annual Compliance
Annual Compliance for a Private Limited Company follows the Audit and Annual General Meeting. Where it includes two forms – AOC-4 (filing financial statements) and MGT-7 (filing an annual return), an intimation of auditor’s appointment (ADT-1) is also necessary for new companies and where an auditor is newly appointed.
Since its first financial year closure, the company has to fulfill all the annual compliance. For this purpose, the company is required to hold an Annual General Meeting once the audited accounts are presented in Board Meeting. In the AGM, the members will adopt the said financial statement, which will further be uploaded with MCA in the given time. From AGM to form filing, there is a timeline prescribed. The ROC filing of annual accounts is governed under Section 129 (3), 137, of The Companies Act , 2013 read with Rule 12 of the Company (Accounts) Rules, 2014 and annual return is governed under Section 92 of the Companies Act, 2013 read with Rule 11 of the Companies (Management and Administration) Rules, 2014.
- AGM should be conducted within 6 months of FY end. The maximum gap between two AGMs held should be 15 months. (Due date 30th September, or within 15 months of previous AGM)
- The announcement of Auditor’s appointment or re-appointment should be done within 15 days of AGM conducted. (Due date: last date 15th October 2019)
- Filing of financial statements Form AOC-4 should be done within 30 days of AGM conducted. (Due date: 30th October 2019)
- Filing of Annual Return Form MGT-7 within 60 days of the conclusion of AGM. (Due date: 29th November 2019)
- Filing of Cost Audit Report Form CRA-4 should be done within 30 days of receipt of the cost audit report.
- Filing of resolutions with MCA regarding Board Report and Annual Accounts Form MGT-14 should be done 30 days from the date of Board Meeting.
- Filing half yearly return with the registrar in respect of outstanding payments to Micro or Small Enterprises Form MSME should be done within a month half-yearly. (Date: First half 31st October 2019 and second half 30th April 2020)
Implications of Late submission of ITR
Late Fee: Filing Income Tax Return by any company is also a mandatory requirement, irrespective of the amount to taxability of income. If the company delays in ITR Filing for the prescribed due date, it has to pay INR 5,000 as the late fee, which can further be extended to INR 10,000 for filings after December. The late fee is INR 1,000 for small business having with an income up to INR 5 Lakh.
Shorter Revision Windows: The 2-year long window was provided earlier to resubmit the revised ITR, which has been reduced to one year, thus, filing returns at the earliest leaves you with more time for revision and resubmitting if required.
Additional Interest payment: Under section 234A, delayed submission of ITR implies the payment of interest at the rate of 1% for every month, or part of a month on the amount of tax remaining unpaid, starting after the due date.
Carry Forward of Losses is Not Permitted: If you have incurred any losses during the year say a loss under the head Capital Gains or any loss in your business, make sure you file your return within the due date. Not doing so will deprive you of carrying forward these losses to the next years for set off against income in future years.
Delayed in receiving fund back from the department: In case of excess tax submission, filing ITR at the earliest would make sure that you receive your refund on time.
The penalty Fees: Rs.100 per day would be levied as penalty fees after the due date of submission of E-form AOC-4 & MGT-7. The penalty increases with the duration of time. Similarly, if there is a delay in conducting AGM according to the scheduled timeline of Company Act, then condonation of delay for taking AGM would be implied which can cost up to Rs.1 lakh.
After discussing various implications and consequences, one must better choose to comply with norms to avoid unnecessary penalties. Companies should fulfill the required policies and norms on time irrespective of it's business’s profit or loss. One must understand that following the norms definitely improves the credibility of the Company and thus can be benefitted in the long-term.
Get your filing done today at www.incometaxindiaefiling.gov.in
