In India, businesses are required to comply with various annual compliances to ensure legal and regulatory adherence. The specific compliances vary based on the type of entity, industry, and applicable laws. However, here are some common annual compliances that businesses typically need to fulfill:
Balance Sheet (Statement of Financial Position): The balance sheet presents a snapshot of the company's assets, liabilities, and shareholders' equity at a specific point in time. It showcases what the company owns (assets), what it owes (liabilities), and the residual interest of the owners (equity).
Income Statement (Profit and Loss Statement): The income statement summarizes the company's revenues, expenses, gains, and losses over a specific period (usually a fiscal year). It shows the company's net income or net loss, which is the difference between revenues and expenses.
Cash Flow Statement: The cash flow statement tracks the inflows and outflows of cash and cash equivalents during a specified period. It categorizes cash flows into operating activities (e.g., sales, purchases), investing activities (e.g., acquisitions, sale of assets), and financing activities (e.g., issuing equity, repaying debt).
Statement of Changes in Equity: This statement explains the changes in the company's shareholders' equity during the reporting period. It includes details of contributions, distributions, net income/loss, and other transactions affecting equity.
Notes to the Financial Statements: The notes provide additional information and disclosures about the items presented in the financial statements. They include explanations, accounting policies, contingencies, and other relevant details necessary for understanding the financial position and performance of the company.
Auditor's Report: The auditor's report is prepared by an independent auditor who examines the financial statements and expresses their professional opinion on whether they present a true and fair view of the company's financial position and performance. The report may also highlight any significant concerns or issues identified during the audit.
Purpose: The primary purpose of an AGM is to present and approve the company's annual financial statements, including the balance sheet, profit and loss statement, cash flow statement, and auditor's report. Shareholders review the financial performance and position of the company, ask questions, and express their views.
Date and Notice: The AGM must be held within a certain period from the end of the company's financial year, as specified by the applicable laws or the company's articles of association. The company provides a formal notice to shareholders, indicating the date, time, and venue of the meeting, along with an agenda and relevant documents.
Agenda: The agenda for an AGM typically includes the following items:
Quorum: The quorum refers to the minimum number of shareholders or their proxies required to be present at the AGM for the meeting to be valid and transact business. The quorum requirement is usually specified in the company's articles of association or relevant laws. If the quorum is not met, the meeting may be adjourned or canceled.
Conducting the Meeting: The AGM is typically chaired by the Chairman of the company's board of directors. The chairman presents the agenda items, facilitates discussions, and ensures a fair and orderly conduct of the meeting. Shareholders are given an opportunity to ask questions, raise concerns, and participate in the decision-making process.
Voting: Shareholders exercise their voting rights during the AGM to approve resolutions. Resolutions can be passed by a show of hands or through a poll (voting by ballot). Certain resolutions, such as special resolutions or those affecting the company's constitution, may require a higher majority for approval.
Documentation: Minutes of the AGM are prepared, documenting the proceedings, discussions, decisions, and voting outcomes. These minutes are a legal record of the meeting and are signed by the chairman or designated company officials.
Filing Requirement: Individuals, Hindu Undivided Families (HUFs), companies, partnership firms, and other entities meeting certain income criteria are required to file income tax returns. The criteria may vary based on the taxpayer's age, income sources, and other factors. It is important to determine the applicable filing requirement based on the current income tax laws and regulations.
Types of Income Tax Returns: The Income Tax Department provides different types of ITR forms catering to different categories of taxpayers. The forms include ITR-1 (Sahaj), ITR-2, ITR-3, ITR-4 (Sugam), ITR-5, ITR-6, and ITR-7. The selection of the appropriate form depends on the nature of income, income sources, and the taxpayer's status.
Income and Deductions: Taxpayers need to report various types of income, such as income from salary, business or profession, capital gains, house property, and other sources, in their income tax returns. They also need to disclose eligible deductions, exemptions, and tax benefits under different sections of the Income Tax Act, such as deductions for investments, insurance premiums, charitable contributions, etc.
Filing Deadline: The due date for filing income tax returns in India is usually July 31st of the assessment year, following the end of the financial year. However, the deadline may be extended by the government in certain cases. It is advisable to stay updated on the specific due dates for filing returns as they may change from year to year.
E-Filing and Digital Signature: Income tax returns can be filed electronically through the Income Tax Department's online portal (https://www.incometaxindiaefiling.gov.in). E-filing is mandatory for certain taxpayers, including companies and individuals with specified income thresholds. Additionally, taxpayers may need to use a digital signature for authentication, especially in the case of certain forms and higher-income thresholds.
Types of GST Returns: The GST regime in India prescribes various types of GST returns based on the type of taxpayer and their activities. Some common types of GST returns include GSTR-1, GSTR-3B, GSTR-4, GSTR-9, and GSTR-9C. The selection of the applicable returns depends on factors such as turnover, type of business, and registration category.
GSTR-1: GSTR-1 is the return for outward supplies, which includes details of sales made during a specific period. Registered taxpayers are required to furnish this return monthly or quarterly, depending on their turnover. GSTR-1 contains information such as invoice details, HSN (Harmonized System of Nomenclature) codes, and taxable value.
GSTR-3B: GSTR-3B is a monthly summary return that taxpayers need to file by a specified due date. It includes consolidated details of outward supplies, inward supplies, input tax credit, and tax payable. GSTR-3B serves as a provisional return until the final GSTR-1 and GSTR-2 returns are introduced.
GSTR-4: GSTR-4 is a quarterly return specifically designed for Composition Scheme taxpayers. This return requires taxpayers to provide summarized details of their outward supplies, tax paid, and the payment of tax liability.
Types of TDS Returns: The Income Tax Department prescribes various types of TDS returns based on the nature of payments and deductors. The common types of TDS returns include Form 24Q, Form 26Q, Form 27Q, and Form 27EQ. The selection of the appropriate form depends on the type of deductee (employee, non-resident, etc.) and the nature of the deductor (government, non-government, etc.).
Form 24Q: Form 24Q is used for filing TDS returns for tax deducted on salary payments. Employers are required to file this return on a quarterly basis, providing details of tax deducted from salaries, employee-wise breakup, and other related information.
Form 26Q: Form 26Q is used for filing TDS returns for tax deducted on payments other than salary. This includes payments to contractors, professionals, rent, interest, dividends, etc. Deductors need to file this return on a quarterly basis, providing details of the deductee, payment amounts, tax deducted, and other relevant information.
Form 27Q: Form 27Q is used for filing TDS returns for tax deducted on payments made to non-residents. This includes payments such as salary, interest, dividends, etc. Deductors need to file this return on a quarterly basis, providing details of the non-resident
Objective: The primary objective of a statutory audit is to express an opinion on whether the financial statements of an organization present a true and fair view of its financial position, performance, and cash flows. The audit aims to enhance the credibility and reliability of the financial information provided by the organization.
Independent Auditor: A statutory audit is conducted by an independent external auditor who is qualified and authorized to perform such audits. The auditor should be unbiased and free from any conflict of interest. The appointment of the auditor is usually done by the shareholders or owners of the organization.
Scope of Audit: The statutory audit covers various aspects of an organization's financial activities, including examining the accounting records, verifying the accuracy of financial statements, assessing internal controls, and ensuring compliance with accounting principles and applicable laws and regulations.
Audit Procedures: The auditor performs a series of audit procedures to gather sufficient and appropriate audit evidence. These procedures may include testing transactions, analyzing financial data, performing analytical procedures, conducting interviews and inquiries, and verifying the existence and valuation of assets and liabilities.
Audit Report: At the conclusion of the statutory audit, the auditor provides an audit report that includes their findings, observations, and opinion on the financial statements. The report typically consists of three sections: an introduction, the auditor's opinion, and the auditor's remarks, if any.
Accountant at TAXAJ