Last Updated on August 7, 2026
Indian companies have a set framework in terms of law and regulation that makes it mandatory for them to maintain compliance on various fronts such as corporate, tax, labour, and finance-related laws. Although incorporation marks just the beginning, there are many regulatory requirements that companies in India have to fulfill through their entire tenure. There are four main laws that govern all the compliance requirements of Indian companies, and these include the Companies Act 2013, Income Tax Act 1961, GST law, and others. It is imperative for Indian companies to maintain certain procedures and schedules for statutory register maintenance, board meetings, annual returns, tax returns, GST returns, etc. The compliance requirements will vary on the basis of the type of business, turnover, employee strength, etc. It helps businesses avoid any penalties, interest, litigation, and regulatory problems, apart from providing greater financial transparency and corporate governance. It helps in building credibility of the company among investors, creditors, customers, and regulators. A well-developed compliance framework makes corporate activities smoother, raises funding and expansion opportunities, and protects directors from any unnecessary legal risks.
Quick Summary
The first year of a company is important for establishing a strong legal, financial, and compliance framework. Key compliances may include appointing the first auditor, conducting required Board Meetings, issuing share certificates within the prescribed time, maintaining statutory registers and books of accounts, filing applicable GST and income tax returns, deducting and depositing TDS where applicable, complying with applicable labour laws, and completing required ROC filings. Timely compliance helps avoid additional fees, interest, penalties, notices, and other legal issues while strengthening the company’s credibility and governance.
- First Auditor: Appoint the first auditor within the prescribed statutory timeline.
- Board Meetings: Conduct Board Meetings as required under the Companies Act, 2013.
- Share Certificates: Issue share certificates within the prescribed period.
- Records: Maintain statutory registers, books of accounts, and other required records.
- Tax Compliance: Complete applicable GST, income tax, and TDS compliances on time.
- ROC Compliance: Complete applicable MCA/ROC filings within the prescribed timelines.
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Company and its Incorporation
A company is a separate legal entity formed by one or more persons to carry on a lawful business in India. The Ministry of Corporate Affairs (MCA) regulates the registration procedure for Indian companies under the Companies Act 2013. Incorporating the company will help it to be a distinct entity free from its owners and enable it to hold assets, sign contracts, obtain money, and sue or be sued in its own name.
Getting digital signature certificates (DSC) for prospective directors, director identification numbers (DIN) if necessary, name reservation, then filing the application form with the Registrar of Companies (ROC). Among other things, the application form comprises the memorandum of association (MOA), articles of association (AOA), and identification and address proofs of the company.
ROC issues the certificate of incorporation bearing the Corporate Identification Number (CIN) of the company once it has been given permission. Registration offers various advantages.
Compliance Requirements in the First Year of a Company
The first year of any company is very important from a regulatory and legal perspective. A company that has recently been incorporated needs to comply with various sections of the Companies Act of 2013, along with tax and labour laws, among others. Important aspects of compliance in the first year,
1. Basic Documentation
This includes the acquisition of the Certificate of Incorporation, Permanent Account Number (PAN), and Tax Deduction and Collection Account Number (TAN).
2. Opening of Bank Account
Open the bank account of the company and ensure that the share capital of the company is deposited through banking channels.
3. Commencement of Business Compliance
File the declaration of the commencement of business, if applicable, within the stipulated time period.
Under Section 10A of the Companies Act 2013, every company incorporated after November 2, 2018 that has share capital must file Form INC-20A within 180 days of incorporation.
This declaration confirms that:
- Each subscriber has paid the full value of shares taken in the MOA
- Payment was made through the company’s bank account
Penalty for non-filing:
- Company: ₹50,000
- Officer in default: ₹1,000 per day of continuing default
If INC-20A is not filed and the company hasn’t commenced business, the ROC can initiate strike-off proceedings under Section 248.
This is the single most commonly missed first-year compliance; founders often don’t know it exists until they receive an ROC notice.
4. Appointing the first auditor
Appoint the first auditor of the company within the stipulated time period under the Companies Act of 2013.
5. Hold the first Board Meeting
Conduct the first Board Meeting of the Company within the stipulated time frame after incorporation.
Under Section 173 of the Companies Act 2013:
- First board meeting: within 30 days of incorporation
- Minimum meetings per year: 4 board meetings
- Maximum gap between two consecutive meetings: 120 days
- Quorum: 2 directors or 1/3 of total directors, whichever is higher (minimum 2)
- Minutes must be recorded within 30 days of each meeting
For small companies (paid-up capital ≤ ₹4 crore AND turnover ≤ ₹40 crore), 2 board meetings per year are sufficient, one in each half-year.
6. Subsequent board meetings
Conduct the requisite number of board meetings as required for the year based on the company’s legal standing.
7. Maintenance of Statutory Registers
Prepare the registers for members, directors, share transfer, charges, and other statutory documents.
8. Share certificate issue
Issue the share certificates to the subscribers within the required period as per the company’s incorporation.
9. Books of accounts maintenance
Maintain the books of account, financial records, invoices, receipt vouchers, and other related documents.
10. Financial statements
Prepare financial statements in accordance with the relevant accounting standards.
11. GST registration
Register for GST as per relevant GST laws.
12. GST Compliance
File GST returns, issue GST invoices, maintain GST records, and pay the GST amounts, as applicable.
13. Income tax compliance
File the company’s income tax return.
14. Advance Tax Payment
Make advance tax payment if the company’s tax liability is above the specified limit.
15. TDS compliance
This includes deduction and deposit of the tax at source from salaries, professional charges, contractors’ charges, rent, and other payments as prescribed.
TDS Obligations in the First Year
| Payment Type | TDS Rate | Threshold |
| Salary | Per slab | Above basic exemption |
| Professional fees (Section 194J) | 10% | Above ₹30,000 per year |
| Contractor payments (Section 194C) | 1% (individual) / 2% (company) | Above ₹30,000 per payment or ₹1 lakh per year |
| Rent (Section 194I) | 10% (land/building) | Above ₹2.4 lakh per year |
| Interest (Section 194A) | 10% | Above ₹40,000 per year (banks) |
TDS deducted must be deposited by the 7th of the following month (March exception: April 30). Quarterly TDS returns (Form 26Q/24Q) are due by the 31st of the month following the quarter end.
16. Labour Law Compliance
Ensure compliance with applicable labour laws relating to maintaining employees’ records, wages, leaves, provident fund, employee state insurance, gratuity, and professional tax.
17. ROC Returns
File the financial statement and return of the company with the Registrar of Companies within the prescribed time period.
18. Directors’ disclosures
Get the necessary disclosures and declarations from the directors, including the disclosures of interest, if any.
19. Record keeping
Maintain statutory books, financial records, minutes of the board meetings, contract papers, and tax papers as per the prescribed time period.
An efficient compliance schedule in the initial year enables a company to fulfil legal requirements, save on fines and penalties, and build a strong foundation for future growth and funding.
Checklist for First Year Compliance of a Company
A company’s first year calls for a number of legal, tax, and business compliance requirements to be fulfilled. An organised checklist helps to ensure that important deadlines are not missed and the company is in compliance with relevant rules.
- Get a Certificate of Incorporation, PAN, and TAN.
- Access the bank account of the business.
- Through the right financial channels, get share capital from subscribers.
- If applicable, file the declaration of business start.
- Within the given schedule, designate the initial legal auditor.
- Keep the first board meeting within the given timeframe.
- Schedule more board meetings as appropriate.
- Distribute share certificates within the stipulated timeframe to subscribers.
- Keep statutory and business records.
- Keep accounting records and related financial papers.
- Get GST registration if needed.
- Generate GST-compliant invoices.
- Complete GST returns and pay GST where applicable.
- On all qualified payments, deduct and deposit TDS.
- Fulfil advance tax and income tax criteria.
- Keep employee records and payables.
- Follow all relevant gratuity, professional taxes, PF, and ESI rules.
- Create the fiscal year’s financial statements.
- Complete yearly ROC forms, including financial accounts and returns.
- For the given time frame, retain statutory records, tax paperwork, contracts, and board minutes.
Following this checklist guarantees seamless business activities, avoids fines, and helps to lay a strong compliance basis.
First Year Compliance Deadlines: Due Date and Timelines
| Compliance | Form | Deadline |
| Open bank account + deposit share capital | – | As early as possible, needed before INC-20A |
| INC-20A (Commencement of Business) | INC-20A | Within 180 days of incorporation |
| Appoint first statutory auditor | ADT-1 | Within 30 days of incorporation |
| First Board Meeting | – | Within 30 days of incorporation |
| Issue share certificates | SH-1 | Within 60 days of incorporation |
| GST registration (if applicable) | REG-01 | Before first taxable supply |
| DIR-3 KYC (all directors) | DIR-3 KYC | By June 30 (every 3 years per 2026 MCA update) |
| File financial statements (AOC-4) | AOC-4 | Within 30 days of AGM |
| File annual return (MGT-7) | MGT-7 / MGT-7A | Within 60 days of AGM |
| AGM | – | Within 6 months of financial year end (September 30) |
| Income Tax Return | ITR-6 | October 31 (audit cases) |
| Advance Tax (1st instalment) | Challan | June 15 – 15% of estimated tax |
Consequences of Non-Compliance
Non-compliance with the initial year compliance requirement could lead to a number of legal, financial and operational issues within the company. Penalties for First-Year Non-Compliance
| Violation | Penalty | Provision |
| INC-20A not filed | ₹50,000 (company) + ₹1,000/day (officer) | Section 10A |
| First auditor not appointed | ₹25,000 (company) | Section 139 |
| AOC-4 late filing | ₹100/day per form, no cap | Section 403 |
| MGT-7 late filing | ₹100/day per form, no cap | Section 403 |
| Share certificates not issued in time | ₹25,000 – ₹5,00,000 (company) | Section 56(4) |
| GST return late filing | ₹50/day (with tax liability) | Section 47, CGST Act |
| TDS not deducted | 100% of TDS amount as penalty | Section 271C, IT Act |
| TDS deducted but not deposited | 1.5% per month interest + penalty | Section 201, IT Act |
A good compliance system helps the organisation avoid avoidable legal and financial risks. KANAKKUPILLAI provides realistic, end-to-end compliance support tailored to your business needs, allowing you to stay compliant and confidently focus on long-term growth.
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Conclusion
The first year of the company sets the foundation for its success in terms of legality, finances, and operations. By doing statutory documents, maintaining proper records, adhering to tax and corporate laws, and making regulatory filings on time, you save yourself from penalties and give investors, banks, and business partners the assurance that you are competent. Being proactive about statutory compliance will help you grow, raise capital, and govern your company in the future. No matter if you are setting up your business for the first time or facing any statutory obligations, KANAKKUPILLAI can make your compliance process easier. With expertise in business registration, ROC compliance, GST and income tax compliance, and more, we offer practical and quick assistance to your company’s compliance needs. Go with KANAKKUPILLAI for compliance and reduction of statutory risks.
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Frequently Asked Questions
1. What are the essential compliances a company must follow in its first year?
A new company will have to perform various compliances that relate to incorporation, maintain statutory registers, appoint auditors, hold board meetings, maintain books of accounts, file income tax and GST returns, if necessary, and file annual reports with the Registrar of Companies within the time periods prescribed by the relevant statutes.
2. Is appointing an auditor mandatory in the first year of a company?
Yes, as per the Companies Act, 2013, it is essential for each company to appoint its first statutory auditor within the time period prescribed. It reviews the company’s financial statements and compliance with the law. A proper appointment in time is necessary to avoid problems with regulators and future filings.
3. Does a company need to file annual returns in its first year?
Yes, as per any statute, it is necessary for a company to file its annual returns and financial statements with the Registrar of Companies, even when it is in its first year.
4. Is it mandatory for all new businesses to be registered under GST?
Not necessarily. It depends on factors like turnover, nature of business activity, supply of goods/services between states and several other considerations mentioned under the GST regime. Yet, a lot of startups and service businesses get themselves registered for GST to enable invoicing and interaction with consumers, among other reasons.
5. What will happen in case first-year compliances are not fulfilled?
In case first-year compliances are not fulfilled, you may face penalties, extra costs, fines, interest payments, regulatory notices, consequences related to directors in certain cases, problems with fundraising, banking activity and future business expansion. Fulfilment of compliance ensures the creation of a sound legal and financial base for business expansion.
