Consequences of Non-Filing of Annual Return and Financial Statements

The consequences of Non-Filing of Annual Return and Financial Statements are severe and one must be aware as well as cautious in this regard. Companies Act 2013 require every Company to file its Annual Return and Financial Statements with the Registrar of Companies, containing information as prescribed in this regard, within 60 days from the date of holding the Annual General Meeting.

Annual return and Financial Statements is mandatory to be filed by all companies, whether it has commenced its business or not, or even if it is a defunct or non-functioning company. In case the Annual Return and Financial Statements are not filed within the specified time period, the same can filed thereafter on payment of requisite late fees. The late fee is of a substantial amount depending upon the period of delay and it should be better avoided.

However, when the Annual Filings are not completed within a period of 270 Days from the date on which it should be have been actually submitted, then the Company and its Officers are imposed with severe consequences.

Private Limited Company Registration  -
Non-Filing of Annual Return


1. Imposition of Penalty: The company shall be punishable with fine which shall not be less than 50,000 but which may extend to 5,00,000.

2. Penalty imposed on directors/officers: Every officer or Director of the company who is in default shall be punishable with imprisonment for a term which may extend to 6 months or with fine which shall not be less than 50,000 but which may extend to 5, 00,000, or with both.

3. Inactive Company: If the Company has not filed its Annual Return for last two financial years consecutively, it will be termed as “Inactive Company”. Thereafter, the Registrar shall issue a notice to the Company and enter its name in the Register of Dormant Companies.

4. Disqualification of Directors: If a company has not filed its Annual Return for continuous period of three financial years then;

  • Every person who is or has been a director of that company shall not be eligible for reappointment as a Director of that company or any other Company for a period of 5 years (5 years from the date on which the company becomes defaulting)
  • The director of a defaulting company would not be eligible to sign e-forms for any other company, until the default of the defaulting company is made good.

In view of the above, it is highly recommended for every Company to file its Annual Return and Financial Statements without any delay.

How to close LLP: Procedure for winding up of LLP

Procedure for winding up of LLP:  A Limited Liability Partnership can be closed down by declaring the LLP as defunct.

Declaring the LLP as Defunct: In case the LLP wants to close down its business or where it is not carrying on any business operations for the period of one year or more, it can make an application to the Registrar for declaring the LLP as defunct and removing the name of the LLP from its register of LLP’s.

Private Limited Company Registration  -
How to Close LLP: Procedure for winding up of LLP

Procedure: File E-Form 24 with the RoC along with the following documents:

  • Copy of detailed application. There is a prescribed format of detailed application in MCA which needs to be submitted.
  • Copy of authority to make the application.
  • Copy of consent of all the partners
  • Copy of consent of all the creditors
  • Copy of affidavit for each of the designated partners
  • Copy of the undertaking/ indemnity bond for striking off name (Please refer the note below)
  • Statement of assets and liabilities duly certified as true and correct by auditor/chartered accountant in practice
  • Copy of acknowledgement of latest Income tax return
  • Attested (by CA) copies of PAN and address proof of all designated partners/partners
  • A paragraph of reason for which the LLP is proposed to be shut down

Once all the documents are executed, the same are filed with the Registrar in e-form 24. The Registrar will keep the application open for a period of one month to check if there are any objections and once it is satisfied, an order will be issued to strike off the name of the LLP from its records and complete the process.

Although this process does take some time, it is one of the most convenient ways to close a LLP, which has not undertaken any business during the last one year.

GST Returns and Compliances

There are various GST compliances that are required to be followed under the new GST law. Following is the list of returns to be filed in detail:

Type of Return Description Responsibility of Filing on whom? Due Date
GSTR-1 Details of outward supplies of taxable goods and/or services effected Registered Taxable Supplier 10th of the next month
GSTR-2 Details of inward supplies of taxable goods and/or services effected claiming input tax credit. Registered Taxable Recipient 15th of the next month
GSTR-3 Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax. Registered Taxable Person 20th of the next month
GSTR-4 Quarterly return for compounding taxable person. Composition Supplier 18th of the month succeeding quarter
GSTR-5 Return for Non-Resident foreign taxable person Non-Resident Taxable Person 20th of the next month
GSTR-6 Return for Input Service Distributor Input Service Distributor 13th of the next month
GSTR-7 Return for authorities deducting tax at source. Tax Deductor 10th of the next month
GSTR-8 Details of supplies effected through e-commerce operator and the amount of tax collected E-commerce Operator/Tax Collector 10th of the next month
GSTR-9 Annual Return Registered Taxable Person 31st December of next financial year
GSTR-10 Final Return Taxable person whose registration has been surrendered or cancelled. Within three months of the date of cancellation or date of cancellation order, whichever is later.
GSTR-11 Details of inward supplies to be furnished by a person having UIN Person having UIN and claiming refund 28th of the month following the month for which statement is filed
Private Limited Company Registration  -
GST Returns and Compliances

All these returns are required to be filed digitally online through a common portal to be provided by GSTN.

GST: The Goods and Service Tax

The Nation is all geared up for the implementation of one of the biggest indirect tax reforms in India. Are you? All you need to know about GST (Goods & services tax) which is set to rule from 1st July 2017.

As the name itself suggests, Goods and Services Tax will be levied on “Supply” of goods and services. It is a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India to replace the existing modes of taxation levied by the central and state governments.

Private Limited Company Registration  -
GST: The Goods and Service Tax

Categories for levy and collection of GST: –

CGST- To be levied and collected by the Central Government.

SGST- To be levied and collected by the State Government.

IGST- To be levied on inter-State supply (including stock transfers) of goods or services. This would be collected by the Centre. Import of goods would be treated as inter-State supplies and would be subject to IGST in addition to the applicable custom duties.

UTGST – Union territories without legislature would levy Union Territory.


Every business carrying out a taxable supply of goods or services will be required to register as a normal taxable person under the GST regime. GST will apply when turnover of the business exceeds Rs 20 lakhs (Limit is Rs 10 lakhs for the North Eastern States). That means that taxpayers with an annual turnover of Rs. 20 lakhs ( Rs. 10 for NE states) would be exempt from GST and need not require to get themselves registered. However, they can opt for voluntary registration.

Goods & services come under the purview of GST:

GST would apply to all goods and services except Alcohol for human consumption. Tobacco and tobacco products would also be subject to GST to levy Central Excise duty.

Benefits to businesses:

Ease of starting business: Any new business needs to have a VAT registration from sales tax department. A business operating in many States has to face a lot of issues regarding the different procedures and fees in each state. GST will bring about a uniformity in process and centralised registration that will make starting business and expanding in different States much simpler.

Higher exemptions to new businesses: Under GST regime the upper limit for registration has been increased, composition scheme has been bought in and further rates of tax have also been comparatively reduced. This will bring respite from tax burdens to newly established businesses.

Simple taxation: There is no need to adhere to different regulations at different States any more. GST will simplify the process by integrating all taxes, making the process of paying tax simpler.

Respite for businesses in both sales and services: GST does not distinguish between sales and services, hence no need to calculate tax separately on goods and services. This will make the process much more time and cost effective.

Reduction in cost of commodities: Due to elimination of small border tax and checkpost issues, etc., Interstate movement will become cheaper and less time consuming. GST can reduce logistics costs of companies producing non-bulk goods (comprising all goods besides the primary bulk commodities transported by railways – coal, iron ore, cement, steel, food grains, fertilizers) by as much as 20 percent.

Also read about GST Returns and Compliances

New definition of Startup

Startup India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Department of Industrial Policy and Promotion (DIPP), the nodal body for Startup India, taking into account the long gestation period in establishing startups, has revised the definition of startups in its startup action plan with a view to encourage startups in India and also to make procedures easy. As per the recent notification on 23rd May 2017, basic criteria to be considered as a Startup are –

Acceptable Form of Business

– a private limited company (registered under the Companies Act, 2013), or

– a limited liability partnership (under the Limited Liability Partnership Act, 2008), or

– a partnership firm (registered under Section 59 of the Partnership Act, 1932)

Type of Business

– Should work towards innovation, development or improvement of products or processes or services, or

– Scalable business model with a high potential of employment generation or wealth creation

Period for which it will enjoy the status of a startup

– Biotechnology sector – 10 years

– Others- 7 years

Other Conditions

1. Turnover : Turnover for any of the financial year should not exceed Rs 25 cr.

2. Entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘Startup’.

NOTE- a business already in existence fulfilling all the above criteria will also be considered as a startup.

Private Limited Company Registration  -


The Department of Industrial Policy and Promotion has laid down many advantages in its startup action plan for registered startups.

– Self-Certification of compliance under 9 environmental & labour law

– Income tax exemptions for three years

– Tax exemptions on Capital gains and investments above fare market value.

– Fast track process of patent registration and 80% rebate on filing patents

– Rs. 10,000 crore fund to support start-ups through alternate startup funds.

– Guarantee fund for startups through National Credit Guarantee Trust Company / SIDBI over 4 years

– Startups in the manufacturing sector are exempted from the criteria of prior ‘experience/ turnover’ without any relaxation in quality standards or technical parameters in public procurement (by government).

– 90 day window to wind up/ close business under insolvency & Bankruptcy code 2016

Process of recognition

The process of recognition as a ‘Startup’ shall be through an online application made over the mobile app/ portal set up by the Department of Industrial Policy and Promotion. Entities will be required to submit the online application along with the Certificate of Incorporation/ Registration and other relevant details as may be sought. Startups also have to submit a write-up about the nature of business highlighting how is it working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.


If recognition is found to have been obtained without uploading the relevant documents or on the basis of false information, DIPP reserves the right to revoke the recognition certificate and certificate of an eligible business for tax benefits immediately without any prior notice or reason.