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Annual Compliances for a Startup in India

There are a variety of annual compliances that a startup must keep in their mind to follow through. Different acts prescribe different compliances to be followed. However, it can be quite difficult for such companies to keep track of these compliances and since at times these startups are run by one person, it can get quite overwhelming as well.

Here is a list of the annual compliances that every startup must put a checkmark across:

Under the Companies Act, 2013
  • Annual Return (Section 92)

An Annual Return has to be prepared containing the particulars mentioned in Section 92 of the said Act as they stand on the close of the financial year. The copy of the Annual Return has to be displayed on the website of the company (if any).

  • Annual General Meeting (Section 96)

All companies (except for One-Person Company) have to hold one Annual General Meeting (AGM) in a year in addition to any other meetings. The gap between two AGMs cannot be more than 15 months. Further, the AGM shall be conducted only during business hours (9:00 am – 6:00 pm).

  • Board Meeting (Section 173)

The First board meeting should be held within 30 days of its incorporation, and thereafter at least 4 Board meetings should be held every year. In case of a One-Person company, small company and dormant company, at least 1 Board meeting should be held every year.

  • Director’s Report (Section 134)

In the general meeting a report prepared by the Board of Directors containing matters as laid down in Section 134 (3) of the said Act. This report is to be attached to the financial statement.

  • Report of Annual General Meeting (Section 121)

Every listed public company has to prepare a Report on the AGM in the prescribed form and a copy of the report has to be filed with the Registrar within 30 days of the conclusion of the meeting along with the prescribed fees.

  • Minutes of the AGM and the Board meetings (Section 118)

Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned.

  • Books of account, financial statements, papers etc. (Section 128)

It is mandatory to keep at the registered office books of account and other relevant books, and papers and financial statement for every financial year. The financial statements have to be made in accordance with Section 129 of the said Act.

  • Appointment of Auditor (Section 139)

Every company shall, at the first annual general meeting, appoint an individual or a firm as an auditor who shall hold office from the conclusion of that meeting for 5 years.

Under the Income Tax Act, 1961
  • Income Tax Return (Section 139)

Every Startup has to file their Return of Income during the previous year in the prescribed form. The Return must be verified in case of a company, by the managing director, and where there is none, then by the director. It has to be filed on or before the due date.

  • Audit of accounts (Section 44AB)

The accounts of the previous year have to be audited by an accountant. The report of audit of accounts in the prescribed form has to be made, which shall be signed and verified by the accountant.

  • TDS related compliances

Section 192 mandates that every person responsible for paying any income which is taxable under the head of “Salaries” has to deduct the income tax at the time of payment. This amount so deducted has to be credited to the Central Government or to the authority the Board directs the amount to be credited to within the prescribed time limit. Quarterly statement of TDS also has to be submitted in accordance with Form 24Q.

  • TCS related compliances

Section 206C talks about TCS and such amount must be paid to the Central Government or the authority the Board directs the amount to be paid to within the time limit prescribed. You also have to file the quarterly statement of collection of TCS in accordance with Form 27EQ.

Under the Central Goods and Services Tax Act, 2017

There are a variety of compliances with respect to the said Act that a company must follow, such as payment of the tax to the Government within the time limit prescribed, filing for returns under Section 39 of the said Act, et cetera.

Other Compliances

Startups have to comply with other laws such as Labor laws, like the Payment of Gratuity Act, 1972 et cetera, and Environmental Laws such as The Water (Prevention & Control of Pollution) Act, 1974 et cetera.

Under the Startup India initiative taken by the Government in 2016, startups have received a multitude of benefits and relaxation from complying with these compliances. These can be availed only by recognized startups though, i.e. if the startup is incorporated or registered as a Private Company, a Partnership Firm, a LLP, or a One-Person Company, it has not been more than 10 years since it has been incorporated or registered, and lastly it has not had more than INR 100 crores as its turnover in any financial year.