Failing to adhere to ROC Compliance is bad enough, but the fines, penalties and Challenges can make your financial burden substantially worse. This can make it tough for the business owners to manage and run their business smoothly.
REASONS FOR NONCOMPLIANCE
POOR INTENT- The organization may not be serious about Annual Return Filing or any ROC filing. This can result in ROC Noncompliance
CASH FLOW CHALLENGES- The Company or LLP may not able to pay taxes on time due to cash flow challenges
INSUFFICIENT EXPERTISE- The business owners may be ignorant about all the rules and regulations that they need to follow as per ROC. But Ignorance of law is no excuse. It is advisable to engage ROC filing services from professionals.
PROCESS FAILURE- Sometimes there can be errors in the information submitted to ROC. There can be errors in ROC forms uploaded too. This is also considered as non-compliance.
LEVELS OF NON COMPLIANCE
Noncompliance is dealt with severely by ROC. The following are various levels of actions taken for Non-compliance
FINES—It is the first step of non-compliance where fines are levied. This is an unnecessary cost that can be easily avoided through on time tax payments and ROC Filing in Chennai
PENALTIES OR SCRUTINY—It is the next level of action by ROC. Here the company has to bear the additional cost of fine and penalties, spend precious business hours for scrutiny by the department. OFFENCE- It is the further level of action taken by ROC. Here the offensive organization has to bear additional cost, spend precious business hours on scrutiny and the status of the company goes to dormant status. It is a serious offence if the company is yet to resolve the issue
STRIKE OFF- This is the last stage wherein ROC directs the organization to pay all fines or penalties. Precious business hours are wasted on scrutiny by the department. Your company will be struck off from the register of companies and the authorized persons may have to face imprisonment too.
ROC NON COMPLIANCE AND THEIR CONSEQUECES
NON COMPLIANCE -Failure to carry out Annual Return filing
CONSEQUECES- Delay up to 330 days of AGM, Maximum up to 12 times of normal fees. —If AGM is above 330 days, then 12 times of normal fees plus Fine not be less than Rs. 50,000/- but which may extend to Rs.5,00,000
NON COMPLIANCE- Failure to carry out Annual Return Filing – Directors
CONSEQUECES- If AGM is above 330 days, then Imprisonment for 6 month , Fine not be less than Rs. 50,000/- but which may extend to Rs. 5,00,000 or both
NON COMPLIANCE- Failure in Filing of Financial Statements
CONSEQUECES -Delay up to 330 days of AGM, Maximum up to 12 times of normal fees. If AGM delay above 330 days, then 12 times of normal fees plus Fine not be less than Rs. 1,000/- but which may extend to Rs. 10,00,000
NON COMPLIANCE- Failure in Filing of Financial Statements- Directors
CONSEQUECES- More than 330 days of AGM, Imprisonment for 6 month , Fine not be less than Rs. 1,00,000/- but which may extend to Rs. 5,00,000 or both
NON COMPLIANCE- Failure in Maintenance of Statutory Registers and Records
It is a must for organizations registered with ROC to maintain 1. Register of Directors and KMP’s and their Shareholding 2. Register of Members 3. Register of Charges 4. Register of Loans, Guarantee, Security and Acquisition 5. Register of Investments 6. Register of Contracts 7. Board Meeting Minutes and Annual General Meeting
CONSEQUECES- Penalty may be varies from Rs. 1,000 to Rs. 5,00,000
NON COMPLIANCE- Failure in Event-Based Filings
Event-Based Filings are 1. Change in Authorized or Paid-up Share Capital of the Company. 2. Transfer of shares 3. Appointment / Change of Directors. 4. Appointment or Change of Auditors. 5. Loans are given to other Companies. 6. Loans to Directors (only if the company complies with Section 185) 7. Opening or closing of bank accounts or change in authorized signatories. 8. Creation or satisfaction of Charges. It is a must for organizations registered with ROC to do event based filings
CONSEQUECES- Penalty may be varies from Rs. 1,000 to Rs. 5,00,000
TOP 10 TIPS TO AVOID PENALTY
Following are the 10 Tips to avoid Penalty or fines
- ON TIME PAYMENTS- It is important to pay your taxes on time within due date to avoid penalties, fines or interest. It is the first step of compliance
- ON TIME REPORTING- ROC expects proper reporting of business activities and their financial statements within due dates. It is necessary to report all financial activities of the business periodically through relevant ROC filings
- RIGHT COMPLIANCE – Follow the practice of on time tax payments, on time reporting or filing of returns and adhere to relevant guidelines of ROC. This ensures you to be in the good books of ROC.
- CALENDER OF ACTIVITIES- Prepare a calendar of activities every month to keep track of due dates for various payments, reporting or filing. Your could engage professional services of ROC filing for private limited companies or ROC Filing in Chennai to keep you updated about due dates and payments
- CHECKLISTS – Prepare a checklist periodically to crosscheck whether you have complied all the payment due dates and reportings to ROC. This ensures better control over the affairs to be reported to ROC. Professionals like Auditors in Chennai or Company Secretaries can help with ROC Filing in Chennai
- SPECIALIST AUDITS- To be ahead you could engage professional ROC filing services to conduct specialist audits and verification of your books of accounts to ensure you are on the right path.
- ENGAGE PROFESSIONALS- It is always advisable to engage professional like Chartered Accountants in Chennai or Company Secretaries to handle all the activities related to ROC.
- OUTSOURCE YOUR BACK END TASK- We understand entrepreneurs need to concentrate on core business activities rather than worry about back end tasks of accounting,tax and compliance. Outsource all your back end task to professionals who are competent.
- BE HONEST AND PAY RIGHT TAX- Keep your accounts clean and pay your taxes right. This goes a long way in making you honest tax payer and be in good books of ROC
- CASH FLOW MANAGEMENT- It is important to have good cash flow management to meet all your tax obligations and compliances. This is the most important action to be taken by every organization.
We understand you still have queries and need clarifications on ROC compliance.
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