According to the Rules and Regulations of Companies Act, 2013, every company registered in Ministry Of Corporate Affairs is required to file Annual Returns in order to avoid hefty penalties for the Directors as well as for the Company.
An Annual Return is a document that is required to be filed by every company with the Ministry of Corporate Affair office on the close of each financial year. Annual Returns shall be filed within 60 days from the date of Annual General Meeting or if it is not held in any particular year from the date at which this meeting shall have been conducted. As per Companies Act, 2013,any
company failing to do so within the prescribed time period will be considered as an offence for which the punishment will be levied. Thus, it is imperative to file the accurate and timely returns for every company. With this blog we will discuss the consequences of not filing Annual Return.
What is the Punishment for Directors?
Directors are Responsible for managing the functions of the company. Thus, filing timely returns is also responsibility of Directors only. If they will fail to file the return on time then they will have to face the punishment for it depending upon the days for which filing is delayed. Here are some cases of penalty to be levied on the Directors:-
Case 1- Non filing of return within 270 days:
If the Director has not filed return within 270 days when it should be filed originally then it
Directors would be liable to pay an Additional Penalty. The Directors will be imprisoned for the term exceeding 6 months and the fine not less than 50K which can extend upto 50 lacs or with both.
Case 2- non-filing of returns for 3 years:
If the return is not filed for the period of 3 years then the Directors have to face severe consequences. They will no more be eligible to be appointed as Director for the same Company for the total period of 5 year from the date from the date on which the company fails to file the return.
Case 3- false statement filed:
In case the return of the company is filled with false or omitted facts the Director or any other person responsible will be imprisoned for the time period of 6 months that may be extended to 10 years. Also he shall be liable for the fine that would not be less than the amount involved in
fraud and can extend up to three times the amount involved in fraud.
What is the punishment for the Company:
The company is treated as a separate legal entity in the eyes of law. Thus, apart from the Directors, the company will also be held responsible for the non-filing of Annual Returns by MCA. Following is the amount of fine that the company is required to pay in different cases:
Case1- Period of delay of 15 days:
The amount of penalty would be 1 time of the number of fees normally charged.
Case 2: More than 15 days but not more than 30 days:
The amount of penalty would be 2 times of the number of fees normally charged.
Case 3- More than 30 days but up to 60 days:
The amount of penalty would be 4 times of the number of fees normally charged.
Case 4- More than 60 days but up to 90 days:
The amount of penalty would be 6 times of the number of fees normally charged.
Case 5- More than 90 days but up to 180 days:
The amount of penalty would be 10 times the amount of fees normally charged.
Case 6- More than 180 days but up to 270 days:
The amount of penalty would be 12 times the amount of fees normally charged.
Case 7- More than 270 days:
The penalty would be 100rs per day after the expiry of 270 days.
Case 8- for 2 years:
If the company fails to file the return for last 2 financial years consistently then the company would be regarded as inactive. Further, the bank account of the company would freeze and the notice of strike off will be issued by the company.