Compliance Relief for Newly Incorporated Companies: Exemption from Filing ROC Annual Return

Are you a newly incorporated company struggling to meet compliance requirements?

Well, here's some good news!

The Ministry of Corporate Affairs has already given a holiday from filing Annual Returns and Financial Statements for companies incorporated on or after 1st January to 31st March.

If you are sailing in the same boat then it will be a cost-saving advantage for you.

Well, lets dive into further details.

India has made strides in improving the ease of doing business, thanks to initiatives by the government aimed at transforming the regulatory environment, balancing stakeholders' interests, and strengthening institutions for world-class corporate governance.

As a result, companies incorporated on or after 1st  January to 31st March enjoy several benefits, including a cost-saving advantage in ROC annual filing.

While the date of incorporation may not matter to the promoter or shareholders, it is essential to note that companies formed after 1st January to 31st March are exempt from ROC annual filing for the first financial year or can choose to file for either three or fifteen months.

However, if a company opts for three months, it does not exempt them from ITR and other RBI compliance.

Thus, filing for 15 months is an excellent option to save money while keeping in mind other laws and compliances.

The decision to file for 3 or 15 months depends on the company's specific circumstances, such as its future plans to apply for a tender or loan, which requires a three-year track record.

Although, there are other areas also which should be considered for the newly incorporated subsidiaries.

1.  The company has to keep a record of the first board meeting, which should be held within 30 days from the date of incorporation of the company. Further, the company is required to file Form INC-20A within 180 days from its incorporation, as the company cannot commence its business without filing this form.

2.  The subscription money and the foreign remittance is to be deposited in the bank account of the company within 60 days from the date of incorporation. Afterwards, Form FCGPR has to be filed in regard to the foreign remittance within 30 days from the date of money received in the bank account of the company.

The key point here which is ignored by most of the companies are “the stamp duty payable on the Share Certificates”.

3.  In parallel to the compliances, the company is also required to take other registrations, which help the companies in the “Ease of doing Business”. For taking the maximum benefit of financial transactions and in order to continue making imports/exports without the payment of IGST, the company has to apply for GST registration along with the Letter of Undertaking (LUT) on a timely basis.

4.  Another Crucial point which should be considered is that the subscription money is not regarded as a transaction by most of the companies, where the chances of missing these types of transactions enhance, which leads to the non-reporting of these transactions in the Transfer Pricing Report.

5.  As per the Act, the AGM is to be held within six months from the date of the closing of the Financial Year. In the case of a newly incorporated company, the exemption of extra three months is given, so in the case of these companies, the first AGM can be held within nine months from the close of its financial year.

In conclusion, newly incorporated companies in India have some benefits and advantages, such as a holiday from filing Annual Returns and Financial Statements for the first financial year, depending on their date of incorporation. However, companies still need to comply with other regulatory requirements, including holding board meetings, filing necessary forms, depositing subscription money and foreign remittance, and registering for GST. Furthermore, companies need to keep track of all transactions, including subscription money, to avoid non-reporting in Transfer Pricing Reports. It is also essential to hold the Annual General Meeting within the stipulated time frame. Overall, while there are some benefits for newly incorporated companies, it is crucial to stay compliant with all relevant laws and regulations to ensure a smooth business operation.

Take advantage of the benefits for newly incorporated companies and ensure compliance with ease. Get expert guidance to navigate the regulatory landscape and stay on top of your obligations for a successful business journey. For more Information, Contact us today at info@manishanilgupta.com

Disclaimer: The information given in this article is for general guidance to the readers. This information should not be sought as a substitute for legal opinion.