According to the rules and regulations of the Companies Act 2013, every company registered under the ministry of corporate affairs is required to file timely annual returns in order to avoid the levy of hefty penalties for the directors as well the company.
An annual return is a document that is required to be filed by every company with the ministry of corporate office on the close of each financial year. Annual returns shall be filed within 60 days from the date of the 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 the Companies Act 2013, any company failing to do so within the prescribed time will be considered as an offense for which the punishment will be levied. Both directors and the company will have to bear the punishments and fines 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 the annual returns of the companies.
What is the punishment for Directors?
Directors are responsible for managing the functions of the company. Thus, filing timely returns is also the responsibility of the directors only. If they will fail to file the returns on time they will have to face the punishment for it depending upon the days for which the filing is delayed. Here are the cases of penalty to be levied on the directors-
Case 1- Nonfiling of return within 270 days
If the directors have not filed the annual return before the expiry of 270 days from the date when the return should have been filed originally he will be liable to pay an additional penalty. The directors will be imprisoned for the time period extending 6 months and the fine not less than 50 thousand that can further extend to a total of 50 Lacs or with both.
Case 2- Non-filing of returns for 3 years
If the annual returns are not filed for the total period of 3 years the existing directors or the previous directors will face the severe consequences. They will no more be eligible to appointed as the director of the same company or any other company for the total period of 5 years from the date on which the company fails to file returns.
Case-3- False statements filed
In case the returns of the company are filled with false or omitted facts the director or any 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 the 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 the MCA. Following is the amount of fine that the company is required to pay in different cases-
Case-1- Period of delay 15 days
The amount of penalty would be 1 time of the number of fees normally charged.
Case-2- More than 15 days but up to 30 days
The amount of penalty would be 2 times the amount of fees normally charged.
Case-3- More than 30 days but up to 60 days
The amount of penalty would be 4 times the amount of fees normally charged.
Case-4- More than 60 days but up to 90 days
The amount of penalty would be 6 times the amount 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 100 rs per day after the expiry of 270 days.
Case-8- For 2 years
If the company fails to file the return for the last 2 financial years consistently then the company would be regarded as inactive. Further, the bank account of the company will freeze and a notice of strike-off will be issued by the company.