INC 20A– Declaration for the Commencement of Business

INC 20A – Declaration for the Commencement of Business

INC 20A is a declaration that needs to be filed by the directors of the company at the time of the commencement of the business. It should be verified by a Chartered Accountant (CA) or Company Secretary (CS) or a Cost Accountant in practice.

Introduction

As per the Companies (Amendment) Ordinance 2018, there is a requirement for all the companies registered on or after 2 November 2018 to file a certificate of commencement of business. INC 20A is a declaration filed by the directors within 180 days of the date of incorporation of the company. This is one of the most important compliances to follow as the penalties for non-filing is extremely high.

Companies which are not required to file INC 20A

The following companies are not required to file INC 20A:

  1. Companies incorporated before 2 November 2018 ( i.e before the commencement of the Companies ( Amendment) Ordinance, 2018).
  1. Companies incorporated after 2nd November 2018 without share capital.

Time period for filing INC 20A

Every company required to file INC 20A shall file the same within 180 days of its incorporation.

Requirement and procedure

A certificate of business commencement has to be obtained within 180 days from the date of incorporation and an eForm has to be filed with the concerned ROC (Registrar Of Companies) regarding the same. A declaration under section 10A from the directors has to be provided in the form of a Board Resolution in the eForm itself. In addition to this, a proof of deposit of the paid-up share capital by the subscribers also needs to be attached in the eForm. If a company pursues objects requiring registration or approval from any sectoral regulators such as The Reserve Bank of India and Securities and Exchange Board of India etc, then it shall obtain such registration or approval along with the attached declaration. The eForm has to be verified and certified by a practising professional before filing with the ROC (Registrar Of Companies).

Penalties for Default

The penalties for non-compliance are very high which has been done intentionally so as to curb out the number of shell companies incorporated. Following are the penalties for non-compliance:

  1. Penalty to be levied on the company: A penalty of Rs 50,000 will be levied on the company if it fails to comply with the mentioned requirement.
  1. Penalty to be levied on the officers: Every such officer in default shall be liable to a penalty of Rs 1,000 per day for each day during which the default continues subject to a maximum of Rs 1,00,000.
  1. Company strike-off: If the Registrar has reasonable grounds to believe that the company is not carrying on any business or operations even after 180 days of incorporation, the registrar may remove the name of the company from the Register of companies.

Fee for filing INC 20A

Fee for filing eForm for companies having share capital :

Nominal Share Capital

Applicable Fees in (Rs.)

Where share capital is less than 1,00,000

200

1,00,000 or above but not exceeding 4,99,999

300

5,00,000 or above but not exceeding 24,99,999

400

25,00,000 or above but not exceeding 99,99,999

500

1,00,00,000 or above

600

Fee for filing eForm for companies having no share capital:

In this case, the fees applicable is only Rs 200.

Additional fee (in case the form is not filed within the time)

Nominal Share Capital

Applicable Fees in (Rs)

Up to 30 days

2 times of normal fees

Above 30 but not exceeding 60 days

4 times of normal fees

Above 60 days but not exceeding 90 days

6 times of normal fees

Above 90 days but not exceeding 180 days

10 times of normal fees

Above 180 days

12 times of normal fees

 

 

For more information on this visit TAXAJ.

Posted By Twinkle

Team TaxaJ​

 


    • Related Articles

    • INC 20A | Mandatory Declaration by Companies

      INC 20A  is a declaration of commencement of business that every company must file if the company’s date of incorporation falls on or after 2nd Nov 2018. Furthermore, the company must file INC-20A within 180 days of the company’s incorporation. And a ...

    • What is Tax Audit? Applicability and Penalty for Non-filing

      What is tax audit? There are various kinds of audit being conducted under different laws such as company audit/statutory audit conducted under company law provisions, cost audit, stock audit etc. Similarly, income tax law also mandates an audit ...

    • Business Income Tax Filing in Bangalore

      Setting up a business in Bangalore comes with the responsibility of navigating the complexities involved in filing income tax returns. One crucial aspect is the business tax return, which essentially serves as a comprehensive statement of a ...

    • Annual Accounts Filing In India

      Every Company registered under Companies Act is required to file their returns with the Registrar of Companies annually. Company Annual Filings refers to the filing of Audited Annual Financial Accounts of the Company along with Directors Report and ...

    • Income tax filing process in India

      Introduction: Filing income tax returns is an essential responsibility for individuals and businesses in India. It not only helps you stay compliant with the law but also ensures the smooth functioning of the country's economy. However, navigating ...