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Everything Private Limited Company Owners Need to Know About Compliance and Audits in India

You've just set up your private limited company in India, and it's your brainchild, your passion project, your ticket to the business world. But here's the deal: there's a world of laws and regulations to be followed. They're the key to winning trust with investors and customers. Ignore them, and it's like wandering a maze without a map – risking fines, chaos, and a tarnished reputation.

Private Limited Company Complaince & Audit

In this blog, we will explore the following:

  1. Essential Registrations

  2. Bookkeeping

  3. Monthly, Quarterly, Annual Filings

  4. Financial Statement Preparation

  5. Income Tax Filing

  6. Tax Audit

  7. GST Audit & Annual Return

  8. Statutory Audit

  9. AGMs and Board Meetings

  10. ROC Compliance

1) Essential Registrations for Private Limited Companies in India

Businesses with an annual turnover of more than Rs. 40 lakhs (Rs. 20 lakhs for businesses in some special category states) are required to register for GST and make timely filings. Compliance with GST regulations is essential to avoid penalties and legal issues.

Provident Fund (PF) Registration:

Mandatory for companies with 20 or more employees. Timely contributions & filings ensure your employees' retirement savings are funded, all while helping you steer clear of penalties and legal complications.

Professional Tax (PT) Registration:

PT registration is state-specific in India. After registration, ensure compliance by timely filing PT returns and making payments as per state regulations to prevent penalties and legal issues.

Licenses Based on Company Type:

Obtain industry-specific licenses and apply to relevant authorities, ensuring timely renewals and strict adherence to terms and conditions. Common licenses encompass trade licenses, FSSAI licenses (for food-related businesses), and others, depending on your business domain.

2) Bookkeeping

Private Limited Company Bookkeeping

Proper bookkeeping is the secret sauce for a private limited company's financial well-being. It's like the GPS for your business finances—keeps you on track, avoids bumps in the road, and helps you make smart money moves. Here's the lowdown:

  1. Pick the Right Tools: Think QuickBooks, Xero, or Zoho Books—these accounting buddies make bookkeeping a breeze.

  2. Stay Organized: Sort your expenses, keep your invoices and receipts in check, and don't mix business with personal dough.

  3. Stay Consistent: Make it a habit to record every financial move pronto—it's like real-time financial surveillance.

  4. Double-Check: Regularly match your bank statements with your records.

  5. Chase Those Invoices: Keep an eagle eye on unpaid bills, give gentle reminders, and keep the cash flowing.

  6. Data Security: Back up your financial records regularly—safety first! And consider going for cloud-based accounting for extra peace of mind.

  7. Ask for Help: If you're in deep waters, don't hesitate to call in the pros—accountants can be your financial superheroes.

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3) Monthly, Quarterly, Annual Filings:

Private Limited Company Complaince Due Dates

Please note that apart from the filings mentioned in the table, there may be other compliances and filings required based on specific regulatory and business requirements. It's crucial to stay informed and adhere to all applicable rules and regulations for your private limited company.

4) Financial Statement Preparation

Preparing financial statements for a private limited company is mandatory.

The process typically involves:

Data Collection: Gather all relevant financial data, including income, expenses, assets, liabilities, and equity.

Accounting Principles: Follow Generally Accepted Accounting Principles (GAAP) or Indian Accounting Standards (Ind AS) to ensure uniformity and accuracy in reporting.

Three key financial statements:

Private Limited Company Financial Statments

  • Balance Sheet: Provides a snapshot of the company's financial position, showcasing assets, liabilities, and equity.

  • Profit and Loss Statement (Income Statement): Details the company's revenues, expenses, and net profit or loss over a specific period.

  • Cash Flow Statement: Outlines the movement of cash and cash equivalents, including operating, investing, and financing activities.

Auditing: Auditors review the financial data, ensuring compliance with accounting standards and providing an unbiased assessment of financial health.

Board Approval: Once prepared, the financial statements are presented to the company's board of directors for approval.

Private Limited Company Income Tax Filing

5) Income Tax Filing

  • Mandatory Filing: Private limited companies are required to file income tax returns, regardless of whether they have made a profit or incurred a loss.

  • Filing Process: Companies must file income tax returns using the appropriate forms. The due date for filing income tax returns is usually September 30th.

  • Tax Planning: Engage in tax planning to optimize your tax situation.

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6) Tax Audit:

  • Applicability: Private limited companies with a turnover exceeding Rs. 1 crore are required to undergo a tax audit. The turnover threshold may change, so keep current with regulations.

  • Auditor Selection: Appoint a qualified Chartered Accountant to conduct the tax audit and ensure compliance with tax laws.

  • Reporting: The auditor will provide a tax audit report, and it's essential to rectify any discrepancies or issues identified during the audit.

7) GST Audit & Annual Return

Private Limited Company GST Audit & GST Annual Return
  • Audit Requirements: Private limited companies with an annual aggregate turnover above Rs. 2 crores are required to undergo a GST audit by a qualified Chartered Accountant. This audit ensures compliance with GST laws and regulations.

  • Annual Return Filing: Companies must file their GST Annual Return using the GSTR-9 form. This return summarizes the annual financial transactions and must be filed by December 31st of the following year.

  • Reconciliation and Records: Reconcile GST returns with financial records to identify and rectify discrepancies. Maintaining accurate records is vital for a smooth audit and annual return filing process.

  • Handling Disputes: In case of GST disputes or assessments, it's essential to address them promptly. Consult with a tax expert or legal counsel if needed to resolve issues with tax authorities.

8) Statutory Audit Under Companies Act 2013

Private Limited Company Audit

Statutory audit, as per the Companies Act 2013, is a legal requirement for private limited companies. It necessitates an independent auditor's examination of financial records to ensure accuracy, transparency, and compliance with the Act.

  • Auditor's Role: Chartered Accountants are typically appointed as auditors. They evaluate the company's financial health and report their findings to shareholders and regulators.

  • Audit Process: The audit process involves a thorough examination of financial statements, documents, and compliance with accounting standards stipulated under the Companies Act 2013.

  • Audit Report: The audit report is a comprehensive document summarizing the audit findings, financial statements, and any identified issues.

A clean statutory audit report enhances a company's reputation, builds trust with stakeholders, and ensures adherence to legal requirements, thereby facilitating access to capital and growth.

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9) AGMs and Board Meetings

Private Limited Company AGM & Board Meeting

Annual General Meetings (AGMs) and Board Meetings are crucial for private limited companies:


  • Held within six months of the financial year-end.

  • Discuss financials, appoint directors, and more.

  • Shareholders participate and vote.

  • Meeting minutes are recorded.

Board Meetings:

  • Held periodically (minimum four per year).

  • Cover financials, strategy, compliance.

  • Ensure quorum and maintain meeting records.

These meetings ensure transparency, compliance, and informed decision-making as required by the Companies Act 2013.

10) ROC Compliance

Private Limited Company ROC Compliance

Private limited companies are required to submit various documents and filings to the Registrar of Companies (ROC) under the provisions of the Companies Act 2013. These filings include annual returns, financial statements, and documents related to changes in the company's structure or management.

  1. Annual Return (Form MGT-7): Within 60 days from AGM.

  2. Financial Statements (Form AOC-4): Within 30 days from AGM.

  3. Appointment and Resignation of Directors (Form DIR-12): Within 30 days of changes.

  4. Change in Registered Office (Form INC-22): Within 15 days of change.

  5. Allotment of Shares (Form PAS-3): Within 30 days of allotment.

  6. Any Changes in Company Details (Form INC-22A): Within 15 days of changes.

  7. Charge Creation or Modification (Form CHG-1 or CHG-9): Within 30 days of creation/modification.

  8. Appointment of Auditors (Form ADT-1): Within 15 days of AGM.

Please note that there may be more forms required based on government requests and specific regulatory changes.

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In conclusion,

as you begin your journey as the owner of a private limited company in India, remember that compliance and audits are essential for building trust and success. Neglecting them can lead to financial penalties and a damaged reputation.

Private Limited Company Meeting

At Taxmarket, we're here to help. We offer a free consultation to discuss your compliance and audit needs. Let us be your trusted partner in navigating the complexities of the Indian business landscape. Contact us today to ensure your company's success and peace of mind.