A Comprehensive Guide to Compliances for Private Limited Companies and GST Registration Requirements

The structure of the Indian business environment has changed greatly over time and is becoming common to start a firm. Among the different types of types of businesses, a Private Limited Company has one of the leading advantages include limited liability, a legal entity, and ability to source capital. However, with these advantages many compliances has been required for the private limited companies especialy related to GST registration. This blog post also establishes different compliances necessary for Private Limited Companies before discussing GST registration and making sure that the entrepreneurs have complete details about the topic.

Understanding Private Limited Companies and Their Compliances

Private Limited Company is a business legal entity that lays limited responsibility of its shareholders to the company’s unpaid shares. In contrast to sole trader businesses, the Private Limited Company has capacity for fundraising from equity and holds larger opportunity for expanding. But, every advantage carries its set of standard regulatory requisites as defined by the Ministry of Corporate Affairs (MCA) and other bodies.

Key Compliances for Private Limited Companies

1. Incorporation Compliances:
   • Memorandum of Association (MoA) and Articles of Association (AoA): These foundational documents define the company’s constitution and operational framework. They must be drafted meticulously and submitted during the incorporation process.
   • Digital Signature Certificates (DSC): All directors of the company must possess a DSC for e-filing with the MCA.
   • Director Identification Number (DIN): Each director must obtain a unique DIN, which is essential for forming a Private Limited Company.
2. Statutory Records and Registers: Private Limited Companies must maintain several statutory registers, including:
   • Register of Members
   • Register of Directors
   • Register of Charges
     These records must be updated timely and made available for scrutiny.
3. Annual Compliances:
   • Annual General Meeting (AGM): Every company is required to hold its AGM within six months of the end of the financial year. The financial statements must be approved by the members and filed with the Registrar of Companies (RoC).
   • Filing of Annual Returns: Companies must file their annual return (Form MGT-7) and financial statements (Form AOC-4) with the RoC. Non-compliance can attract penalties.
4. Board Meetings: Companies must conduct minimum four board meetings each year, with a gap of not more than 120 days between them. Minutes of these meetings need to be recorded.
5. Tax Compliances: Filing of Income Tax Returns is an annual requirement for Private Limited Companies, typically due by September 30th of the assessment year. Companies must also comply with Transfer Pricing regulations, if applicable.
6. Secretarial Audit: Certain classes of companies are required to conduct a secretarial audit annually to ensure compliance with various laws and regulations.

GST Registration Requirements

Shown below is the Goods and Services Tax (GST) as a major reform of the Indian indirect taxation structure. It requires entities of a certain turnover and types of operations to compulsory GST registration.

Compulsory Registration Under GST

Under GST law, certain entities must obtain Compulsory Registration Under GST. Here’s an overview of the essential criteria:

1. Threshold Limit:
   • In the case of goods, failure to make a turnover of ₹40 lakhs (₹20 lakhs for special category states), businesses require GST registration.
   • In case of services, the limit up to which claim can be deposited is ₹20 lakhs.
2. Inter-State Sales: Any turnover whether big or small if it crosses the limits mentioned above in the sales between the private limited company and its branch in other states requires getting the GST registration.
3. Online Sales: E-commerce sellers have to ensure that they register for GST irrespective of the amount of turnover they have since they are governed by a different set of rules.
4. Specific Categories: IT shall be compulsory for specific categories of dealers like those involved in supply of taxable products even if their turnover is low which is listed below:
   • Non-resident taxable persons
   • Casual taxable persons
   • Those who supply goods and services through e-commerce platforms

Procedure for GST Registration

1. Filing Application: Every firm is required to apply for GST registration through the GST Portal electronically. The application needs the basic details about the business, the location of the business, the business’s bank account, as well as any business documents of the business.
2. Verification: On submission the authorities will cross check the information provided and in a few days, the applicant may receive an acknowledging GST registration certificate or they may seek for further elaboration.
3. GST Number: Upon approval, the business will be issued with a special GST Identification Number (GSTIN) that has to be provided in every invoice and return file on GST.

Compliance and Filing Under GST

Companies thereafter continue to be subjected to various compliance activities after they have complied for GST registration. Regular GST return filings are essential based on the turnover and type of business, including:

• GSTR-1: Reporting outward supplies.
• GSTR-3B: Monthly summary return of inward and outward supplies.
• Supplies received from other divisions/centers during the month/Supplies given to other divisions/centers during the month.

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There is no Private Limited Company that can function exceedingly well without compliance. An appreciation of the legal requirements which private limited companies need to adhere to and the consequences of mandatory GST registration is essential knowledge for new businesspersons. It also plays a significant role to protect the interest of the company and guarantees the company’s sustainability. Staying informed on these needs may result to improvements in budgeting, operational efficiency, and corporate trust in rainy environments for water-business related ventures.

If you need more information about the compliance standards you need to meet or if you are in doubt, having to register for GST, you need to seek the services of a financial expert or compliance officer. For more information, call Finodha today to get support with your business registrations, tax filings, and compliance.

FAQs

Q1: What are the key benefits of registering as a Private Limited Company?
A1: Benefits include limited liability for shareholders, perpetual succession, easier access to funding, and enhanced credibility among clients and partners.

Q2: Is GST registration mandatory for all businesses?
A2: No, GST registration is not mandatory for every business. It is only compulsory for those exceeding the specified turnover thresholds or engaging in inter-state supplies and certain specific categories.

Q3: What penalties are imposed for non-compliance with GST regulations?
A3: Penalties can include a monetary fine, late fees, and, in severe cases, imprisonment for willful default.

Q4: How often do I need to file GST returns?
A4: The frequency of GST return filing varies based on turnover and whether or not the business is registered as a composition dealer. Most must file monthly returns, while some may only file quarterly or annually.

Q5: Can I apply for GST registration without a Permanent Account Number (PAN)?
A5: No, a PAN is a prerequisite for obtaining GST registration in India.

Understanding compliances for private limited companies and statutory requirements such as GST registration is crucial for the success and growth of your business. Stay informed, remain compliant, and watch your entrepreneurial venture flourish!