What is an Annual Return?

An annual return is a document that companies registered under the Companies Act, 2013, in India must file with the Ministry of Corporate Affairs (MCA). It provides a detailed record of a company's activities during a financial year.

The primary purpose of filing an annual return is to ensure transparency, accountability, and adherence to statutory requirements. It provides shareholders, regulators, and the public with key information related to the company's structure, operations, and governance.

The key components of an annual return include:

Company Information

This section includes details such as the company name, registration number, date of incorporation, and entity type (private or public limited). It also details the registered office address, contact information, and any changes in these particulars during the year.

Share Capital and Shareholding

This part highlights the share capital structure of the company. You can find information on the company’s authorised, issued, subscribed, and paid-up share capital. It also lists the shareholders and their shareholding percentages, along with changes in share ownership during the year, such as transfers or allotments.

Details of Directors

This section specifies the names and designations of directors and key management personnel. It specifies their appointments, resignations, and role changes within the financial year. You can use this section to understand and analyse the leadership and governance of the company.

Financial Information

Under this section, you can find detailed information on the company's financial performance, including revenue, profits, and losses. It may also outline dividend declarations and payments to shareholders.

Compliance Certificates

The annual return includes certifications to affirm compliance with statutory requirements. Depending upon the type of company, it may have auditor certificates, declarations by directors, or other attestations to ensure adherence to legal norms.

Who Needs to File an Annual Return?

Filing an annual return is mandatory for the following companies.

• Private limited companies: A Private Limited Company is a business entity with limited liability. It restricts the transfer of shares, limits the number of members to 200, and restricts public subscription for shares or debentures.
• Public limited companies: A Public Limited Company is a business entity that can offer shares to the public. It requires a minimum of seven members and has no maximum limit for members.
• One-person companies (OPCs): OPCs allow a single individual to incorporate a company. It combines the benefits of limited liability and simplified compliance. An OPC must have one member and one nominee, cannot engage in non-banking financial activities, and faces turnover-based restrictions on conversion.
• Small companies and LLPs (as per regulatory requirements): Small companies are privately owned businesses with a paid-up share capital of up to ₹4 crores and an annual turnover not exceeding ₹40 crores. LLPs, governed by the LLP Act, 2008, combine the benefits of limited liability and partnership flexibility.

Documents Required for Filing an Annual Return

Companies must file forms like AOC-4 (for financial statements) and MGT-7 (for annual returns). These forms must be submitted within 30 and 60 days, respectively, from the Annual General Meeting (AGM) date. If the company has appointed or reappointed any auditor, they must file Form ADT-1 within 15 days of the Annual General Meeting (AGM).

Other mandatory documents include: 

• The balance sheet outlines the company's financial position by highlighting assets and liabilities.
• Profit & loss statement that summarises the company's revenue, expenses, and profits.
• Financial Statement Audit report (if applicable)
• Details of shareholders and directors to provide information about ownership and management.
• Board meeting resolutions to highlight decisions made during board meetings.
• List of share transfers (if any occurred during the financial year).
• Corporate Social Responsibility (CSR) Report (if applicable).
• Companies with subsidiaries must furnish a statement of subsidiaries.

How to File Annual Returns for Companies in India?

The key steps to filing annual returns for companies are detailed below:

• Step 1: Visit the MCA website and visit the “Annual Filing Corner.”
• Step 2: Download the applicable eForms, such as:
  
  Form 23AC: For filing the Balance Sheet.
  Form 23ACA: For filing the Profit & Loss Account.
  Form 20B: For filing the Annual Return (for companies with share capital).
  Form 21A: For filing the Annual Return (for companies without share capital).
  Form 66: For filing the Compliance Certificate (if applicable).
  
  
• Step 3: Enter the CIN and click “Pre-fill” to auto-populate company details. Complete the remaining fields and attach relevant documents.
• Step 4: Affix the Digital Signature Certificate (DSC) of the authorised signatory registered on the MCA portal.
• Step 5: To validate the form, use the “Check Form” and “Pre-Scrutiny” options. Ensure the file, including attachments, does not exceed 2.5 MB.
• Step 6: Log in to the MCA portal and upload the completed e-forms. The system will display the applicable fees.
• Step 7: Choose a payment method (credit card, net banking, or challan). A Service Request Number (SRN) and payment receipt will be generated upon successful payment.
• Step 8: After submission, download the acknowledgement and keep it for future reference.

Related: Excel Templates for Tax Filing

Important Deadlines and Compliance Requirements

Before you file an annual return for companies, it is important to know the key dates and other compliance requirements:

Filing Deadlines for Different Types of Companies

The filing deadlines for annual returns differ based on the type of company. Here are the details:

• Private Limited Companies: The due date for filing annual returns for these companies is within 60 days of the Annual General Meeting (AGM) date. The AGM must be held within six months of the end of the financial year but no later than September 30th.
• Public Limited Companies: They have similar norms as private companies and are required to file annual returns within 60 days of the AGM. They should hold the AGM within six months from the financial year-end.
• One-Person Companies (OPC): This type of company is exempt from holding an AGM. However, it must file its annual returns within 180 days of the end of the financial year.
• Limited Liability Partnerships (LLPs): LLPs must file annual returns using Form 11 by May 30th of each year, regardless of their financial year-end.
• Companies Without Share Capital: Similar to companies with share capital, these companies must file their annual returns within 60 days of the AGM.

Late Fees and Penalties for Non-compliance

If the company fails to file its return on time, it may face the following penalties.

How to Rectify Errors in Previously Filed Returns?

Before fixing any errors, look closely at the filed returns to spot mistakes like incorrect financial data or missing details. Once you have identified what needs to be corrected, follow these steps:

• Step 1: Log in to the MCA portal using your credentials. Ensure you have the necessary authorisation to make changes.
• Step 3: Use the appropriate e-forms, such as Form MGT-7 (Annual Return) or AOC-4 (Financial Statements). Additional fees or penalties may apply if you make corrections after the due date. 
• Step 5: Attach any required supporting documents, such as board resolutions or corrected financial statements, to validate the changes.
• Step 6: Use an authorised signatory's Digital Signature Certificate (DSC) for verification.
• Step 7: After submission, monitor the status of your revised return on the MCA portal to ensure it has been processed successfully.

Common Mistakes to Avoid While Filing an Annual Return

When filing annual returns for companies, beware of the following mistakes:

• Make sure your financial details and shareholding information are accurate, as any mistakes can cause discrepancies and lead to your return being rejected. Always double-check the data with audited financial statements.
• Don't miss the filing deadlines; late fees add up daily, leading to financial burdens.
• If your company requires an auditor's certification, ensure you obtain it. Missing this step can make your filing invalid.
• Also, check that all director details and company registration information are correct. Make sure Director Identification Numbers (DINs) are active and match official records.

Conclusion

Filing annual returns is a key responsibility for every registered company. It ensures compliance and transparency. However, missing deadlines as a business owner can result in fines and legal consequences. Always double-check the details you provide and ensure the form you use for filing returns is correct. These simple steps will help keep your company legally compliant and running without any hassle.