Mandatory ROC Compliances for a Private Limited Company

1. Auditor Appointment

 Every company shall appoint their auditor within 30 days of registration. This is a mandatory compliance for every company.

2. Board Meetings

Private limited corporations must hold regular board meetings to debate and make crucial decisions about the company’s operations, finances, and strategies. Private limited companies shall conduct at least 4 board meetings in a year.

3. Commencement of Business Filing in Form 20A

Form 20A is a mandatory filing for any company that was incorporated after November 2018. Form 20A is meant for declaration that company has transferred the respective paid up share capital in the bank and is considered to be operational or that it has commenced its business. This has to be done within 180 days of company incorporation.

4. Annual General Meeting (AGM)

An AGM is a yearly meeting of shareholders and directors to examine the company’s financial performance, future plans, and other important issues. The company’s financial accounts are given, and shareholders have the opportunity to ask questions.

5. Disclosure of Director’s Interest

A private limited company’s directors are obligated to disclose their financial interests in any contracts, arrangements, or transactions involving the company. This transparency helps to avoid conflicts of interest and ensures that decisions are made fairly.

6. Filing of Income Tax and Annual Return

Private limited corporations are required to file an annual income tax return . They must also file an annual return with the Registrar of Companies. This return contains information about the company’s audited Balance sheet, Profit Loss Account, shareholder structure, and other important factors. Forms such as AOC-4, MGT-7/7A

7. Maintenance of Statutory Registers

The firm is required to keep certain statutory registers, such as the register of members, the register of directors, and the register of charges. These registers provide critical information on the company’s shareholders, directors, and liabilities.

8. Filing of Director’s Identification Number (DIN) KYC

Private limited company directors must complete their KYC (Know Your Customer) for their Director’s Identification Number. To ensure the accuracy of the records, this process entails validating and updating personal information.

 Read more on KYC

Event-Based ROC Compliances for a Private Limited Company

A detailed table defining the nature of compliances, pertinent sections, e-forms, and descriptions for event-based ROC compliances is provided below:

Read more about ROC Compliances E-Form

Conclusion

Finally, following ROC compliances is a critical component of running a private limited company. Non compliance with Roc has a huge penalty and it may result in striking off the company. These compliances help not just to legal compliance but also to the company’s credibility, transparency, and seamless operation. To negotiate the complicated environment of ROC compliances, businesses should have their tax and compliance consultant who looks after their compliance matter. TAXVIC helps small and medium companies fulfill all the roc compliance needed for a private limited company. 

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Understanding Director KYC

The procedure through which directors of corporations supply important information and paperwork to verify their name, address, and other important and relevant details is known as Director KYC. It is carried out to prevent fraudulent practices and identity theft, as well as to ensure that directors meet the eligibility requirements for their roles.

What is the significance?

It encourages transparency and accountability, which improves corporate governance standards. It assists businesses in maintaining their reputation and building trust among stakeholders.

Fraud and money laundering prevention

KYC procedures serve an important role in combating fraudulent activity and money laundering by validating the identity of directors.

Regulatory Compliance

In many jurisdictions, it is a statutory compliance requirement. Failure to follow these rules may result in fines or disqualification.

Director KYC Compliance Due Date (2023-24)

The due date of filing DIR-3-KYC FORM is 30th September of every financial year.

Contact us for getting your Director KYC done: info@taxvic.com 

Director Know Your Customer (KYC) Procedure

The following steps are mainly encountered in the process:

Obtaining Required Documents

As per local legislation, directors must acquire the essential documents, such as identification evidence, address proof, PAN (Permanent Account Number), Aadhaar (or comparable identifying numbers), and other relevant details.

Filling Out KYC Forms

Directors must complete the required KYC paperwork, providing correct and updated information about themselves.

Document Submissions

Directors must submit the completed KYC forms, along with the requisite supporting documentation, to the appropriate authorities within the time frame specified.

Validation and Acceptance

The authorities will verify the supplied documents, and upon successful verification, the director will obtain a compliance confirmation.

Conclusion

Director KYC is a mandatory compliance obligation that seeks to sustain business transparency, prevent fraud, and ensure effective governance. Directors can meet their commitments and contribute to a vibrant corporate ecosystem by adhering to the specified due dates and fulfilling the appropriate paperwork requirements. To ensure compliance with Director KYC standards, stay updated on the current rules and consult legal professionals for relevant recommendations.

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Currently, the following services are covered under the Equalisation Levy in India:

• Online advertising services
• Provision for digital advertising space
• Any other service as may be notified by the government

The Government of India has the power to notify additional services that would be subject to the Equalisation Levy in the future. The definition of the services covered by the Equalisation Levy is broad and aims to cover all forms of digital services that are provided to Indian residents or businesses by non-resident companies. However, it is important to note that not all digital services are subject to the Equalisation Levy, only the specified ones as notified by the government.

The Equalisation Levy is a tax imposed by the Indian government on specified digital services, it is tax withheld at the time of payment by the service recipient. If below two conditions are met then it becomes mandatory for the service recipient in India to withhold the tax prescribed under equalisation levy. 

• The payment made to a non-resident service provider.
• The annual payment made to one service provider is more than Rs. 1,00,000 in one financial year.

Rate of Tax under Equalisation levy

Under this rule, the rate of tax is 6% of the gross consideration to be paid.

Example: ABC an Indian entity has availed digital advertisement services on a platform which is located in Singapore to promote his business. It has to pay Rs. 5,00,000 in FY 2023-24 to the Singapore entity for the advertising services availed.

ABC will have to now deduct tax under Equalisation Levy at the rate of 6% of Rs. 5,00,000 = Rs.30,000 and pay the balance of Rs. 4,70,000 to the Singapore entity.

When is it Not applicable, The 6% EV?

If that non-resident service provider has a permanent establishment in India. or if, the requested service is related to that permanent establishment.

The total amount of the consideration to be paid for the specific service received or payable is less than Rs. 1,00,000.

The service described is not intended to be used for the business purpose.

Equalisation Levy Expansion

In 2020 Government of India expanded the scope of this levy by covering other digital and e-commerce space, the objective was to cover a larger number of transactions. It brought a rule to cover all non-residents whose owners operate or manage an e-commerce platform for online sale of goods or services or both or facilitation of such sale. This new levy system is not applicable for the already existing levy system of 6% that is applicable to online advertising or the provision of digital space.

Under this new levy, tax rate will be 2% on consideration receivable by a non-resident “e-commerce operator” for “e-commerce supply or services” provided or facilitated by it on or after 1st of April 2020.

What does e-commerce operator mean?

Anyone who owns, operates, or manages a digital facility for the online sale of goods or services or both.

What does E-commerce supply or services mean?

It means online sale of goods or services (including facilitation of the sale of such goods or services) by an e-commerce operator.

The equalisation levy is applicable when a sale is made, or service is provided to either an Indian resident, or to any person who buys goods or services using an internet protocol (IP) address located in India, or to a non-resident in ‘specified circumstances.’

These ‘specified circumstances’ include firstly, the sale of advertisement targeting an Indian resident customer or a customer accessing the advertisement through an Indian IP address, and secondly, the sale of data collected from Indian residents or from persons who use an Indian IP address.

When is it Not applicable, The 2% EV?

An “e-commerce operator” will be excluded from the 2% tax if that operator has permanent establishment in India and the e-commerce supply or service is effectively connected with this permanent establishment; or if the turnover of the e-commerce operator (on which the 2% equalisation levy is otherwise leviable) is less than Rs. 2 Crores during the financial year.

Due Dates for Compliance 

The responsibility to comply with the law of 2% levy is that of non-resident e-commerce operators. and for 6%, it is the responsibility of the resident service recipient to deduct tax and to file the tax forms of EV.

The tax deducted under 6% EV has to be deposited by 7th of the following month by recipient of services

The tax deducted under 2% EV has to be deposited quarterly, 7th of month following the end of quarter by non-resident e-commerce operator.

Along with the payment of tax or say deposit of tax with the government, a form has to be filed with the Government. Equalisation levy statement has to be filed by 30th June after the financial year ends.

Consequences of Delayed Payments of EV

• Failure to deduct the equalisation levy: The penalty amount will be equivalent to the Equalisation Levy that the assessor failed to deduct.
• The levy has been deducted from the payment being made but has not been deposited. The fine amount in this case will be Rs. 1,000 per day till the default continues, but the amount of a penalty must be less than the sum of the Equalisation Levy.
• On failing to file the Equalisation Levy statement within the prescribed due date, there is a penalty of Rs.100 per day if the default persists.
• There is imprisonment of a term of up to 3 years and a fine on submission of false statements.

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A FIRC (Foreign Inward Remittance Certificate) is a document that acts as proof of a foreign exchange inflow transaction. In India, approved banks provide FIRC to Indian residents who receive foreign funds in their accounts. The FIRC is a critical document for firms and people who receive foreign currency payments. It acts as proof of money receipt and that can be used for a wide range of purposes, which would include tax returns, regulatory compliance, and providing documentation of foreign exchange earnings for export-related transactions.

Categories of FIRC

Foreign Inward Remittance Certificates are classified into two types:

Physical FIRC

Physical FIRCs are paper-based certificates issued by acknowledged banks.

E-FIRC

The E-FIRC is an online-accessible digital certificate. It would be a more convenient choice since it does not require physical copies and can be retrieved from everywhere all the time.

How to apply for a Foreign Inward Remittance Certificate?

The following procedures are involved in the request for a Foreign Inward Remittance Certificate (FIRC):

• Following RBI requirements and the bank from which the remittance has been issued in India.
• The recipient must make a request to their bank for the FIRC with the following information.
  • Account number
  • Transfer Amount
  • Date of transfer
  • Purpose of transfer
  • UTR Number details
  • Receiver Details
• The FIRC is issued when the bank checks the transaction data.
• The recipient can obtain a physical FIRC from the bank or access the E-FIRC online.

What information does the Foreign Inward Remittance Certificate Format contain?

The FIRC has the following information:

• The name and address of the remitter.
• The purpose of the remittance.
• The amount received in foreign currency.
• The exchange rate applied for converting the foreign currency into the local currency.

How to obtain an E-FIRC online?

To obtain an E-FIRC online, the receiver must complete the following steps:

• Access the authorized bank’s website.
• Navigate to the FIRC section and choose the appropriate transaction.
• Enter the required information and submit the request.

The bank inspects the details and issues the E-FIRC.

The FIRC is issued by recognized banks in accordance with the Reserve Bank of India’s (RBI) standards. The FIRC is required for GST compliance considerations when exporting services.

If you need any guidance on compliance aspects of Foreign inward remittance, Book appointment with our compliance expert CA Reetu. Visit Tax Vic website and book an appointment.

Procedure for Issuing FIRCs Notifications

The RBI has issued notifications outlining the procedure for issuing FIRCs, and authorized banks must abide this guidance. The guidance are as follows:

• Details on the FIRC’s format.
• The data to be included in the FIRC.
• The timeline by which the FIRC must be provided.

What is the distinction between a FIRC (Foreign Inward Remittance Certificate) and a BRC (Bank Realization Certificate)?

There are distinctions between the FIRC and the Bank Realization Certificate (BRC). The BRC is issued to exporters and acts as proof of payment for items exported. In contrast, the FIRC is granted to residents who receive foreign funds in their accounts.

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Finally, the Foreign Inward Remittance Certificate (FIRC) is a critical document for firms and people receiving foreign exchange payments in India. The FIRC serves as proof of funds receipt and can be utilized for number of purposes, such as including tax returns, regulatory compliance, and verification of foreign exchange earnings for export-related transactions. The issuance of the FIRC is subject to RBI guidelines, and authorized institutions must follow these guidelines. Because it eliminates the necessity for physical copies and therefore can be accessed online, the E-FIRC is a more sensible option for recipients.

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