TAX & COMPLIANCE NIDHI COMPANY
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A Nidhi company is required to file annual tax and compliance forms, similar to other types of companies. These compliance measures are crucial as they provide valuable insights into the company’s operations and performance.
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A Nidhi Company is a type of non-banking financial company established under the Companies Act of 2013. Its primary purpose is to facilitate borrowing and lending among its members.
These companies are often referred to as Mutual Benefit Finance Companies.
Every Nidhi Company must adhere to the regulations outlined in the Companies Act of 2013 and the Nidhi Companies Rules of 2014.
Failure to comply with these regulations can result in penalties for both the company and its executives.
The registration of a Nidhi Company is governed by the Companies Act of 2013. Therefore, it is essential for each company to register under this act and adhere to the prescribed compliance requirements.
A Nidhi Company operates as a Public Limited Company, safeguarding the interests of its stakeholders, which is one of its primary responsibilities. Thus, following Nidhi Company compliance is crucial.
To ensure the smooth operation of the company and prevent any legal issues, it is imperative to adhere to these compliance requirements diligently.
After incorporation, Nidhi Companies must adhere to several compliance requirements, which include:
According to the Nidhi Rules, 2014, certain mandatory compliances must be fulfilled by each Nidhi Company within one year of incorporation. These include:
While Nidhi Companies are required to file annual compliance reports, some of these filings need to be submitted at specified intervals throughout the year.
Typically, these compliance reports reflect the status and performance of the Nidhi Company’s operations over the course of the year.
As mandated by the Nidhi Rules, 2014, and the Companies Act, 2013, Nidhi Companies must adhere to the prescribed annual compliance requirements.
Below is a comprehensive checklist that every Nidhi Company must adhere to within the specified deadlines:
Form NDH-1
It is mandatory to file Form NDH-1 within 90 days from the close of the financial year. This form must be certified by a practicing Chartered Accountant, Company Secretary, or Cost Accountant. The filing should be accompanied by the prescribed fee.
Form NDH-2
Form NDH-2 must be filed if the company fails to meet the following compliance requirements:
This form should be submitted to the Regional Director within 90 days from the end of the financial year, along with the required fee. After the application is reviewed, the Regional Director will issue a decision within 30 days of receiving the NDH-2 application. If the company cannot meet the compliance deadlines, it is crucial to file an application requesting an extension.
Form NDH-3
NDH-3 is a half-yearly return that must be filed with the Registrar of Companies (ROC). Each Nidhi Company is required to submit this form along with the prescribed fee within thirty days following the end of every half-year. The form must be signed by a practicing Chartered Accountant, Cost Accountant, or Company Secretary.
Form NDH-4
This form is used to apply for declaration as a Nidhi Company and for updating the company’s status. According to the regulations, the following rule is added:
“3A. Declaration of Nidhis — Upon receiving an application (in Form NDH-4 with the applicable fee) from a public company seeking to be declared a Nidhi, and once it is confirmed that the company meets the necessary criteria, the Central Government shall inform the company of its status as a Nidhi in the Official Gazette.”
For Nidhi companies registered under the Act after the commencement of the Nidhi (Amendment) Rules, 2022, the application must be submitted within 120 days of incorporation, provided the following conditions are met:
Companies that do not comply with this rule will be barred from filing Form SH-7 (Notice to Registrar of any change in share capital) and Form PAS-3 (Return of Allotment).
Form ADT-1: Auditor’s Appointment
As per Section 139 of the Companies Act, 2013, every company must inform the ROC about the appointment of its auditor using Form ADT-1.
Preservation of Books of Accounts
Nidhi Companies are required to maintain their books of accounts in a timely manner for income tax purposes. Companies with gross receipts exceeding Rs. 1,50,000 in the last three years must maintain these records.
Protection of Statutory Registers
According to the Companies Act, 2013, every registered company must maintain statutory registers. These registers must be presented to the ROC within a specified timeframe and with the necessary fees. The statutory register serves as a record of the company’s shareholders, directors, and meetings.
Preparation of Financial Statements
Every entity, including Nidhi Companies, must prepare financial statements, which include the balance sheet, profit and loss account, and cash flow statement.
Director’s Report
As mandated by the Companies Act, 2013, each Nidhi Company is required to prepare a Director’s Report. This report provides an overview of the company’s performance and compliance with financial, accounting, and corporate social responsibility standards set by the board of directors.
Conducting Statutory Meetings
It is essential for Nidhi Companies to hold statutory meetings, including shareholders’ meetings and Board of Directors’ meetings.
Filing Income Tax Returns
All Nidhi Companies must file their annual Income Tax Returns by September 30 of the following financial year.
Filing Financial Returns in Form AOC-4
Every company is obligated to file financial returns with the Ministry of Corporate Affairs using Form AOC-4. Financial statements must be submitted within 30 days following the Annual General Meeting, and the form must be certified by a practicing Chartered Accountant or Company Secretary.
Filing ROC Annual Returns (MGT-7)
The Ministry of Corporate Affairs provides Form MGT-7 for all companies to report their annual return details. Nidhi Companies are advised to file MGT-7 within the timeframe specified by the Ministry.
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