Annual Tax Compliance For Nidhi Company

Overview – What is Nidhi Company Registration?

Nidhi Company is classified as a Non-Banking Financial Company, or NBFC, which does not require a license from the Reserve Bank of India (RBI). The Ministry of Corporate Affairs manages and controls a Nidhi Company Registration Process under Section 406 of the Companies Act, 2013. Their principal activity is lending and borrowing among its members. Registration of Nidhi Company in India is a good option for those who want to start a lending business with a small investment. A Nidhi Company exists to benefit all of its members and owners equally. It is important to note that a Nidhi Company must comply with Section 406 of the Companies Act, 2013 and the Nidhi Rules, 2014.

Nidhi investments play an important role in assisting the middle and lower white-collar classes by providing simple and convenient money management. Nidhi enterprises give relief and should be allowed to develop under government supervision because fundamental qualifying standards for credits and investments are difficult to meet for small workers.

Nidhi Company Registration in India

The Nidhi Company is incorporated under the terms of the Companies Act of 2013. The sole purpose of founding a Nidhi Company is to instill in its members’ habits of saving and thrift. A Nidhi Company requires a minimum of Rs.5 lakh in capital to get started. Nidhi Company is simple to form because it is not required to obtain a license from the Reserve Bank of India. It’s also a Public Limited Company, which means the last words of its name must be “Nidhi Limited.”

Benefits of Nidhi Company Registration

The following are some of the advantages of Nidhi Company registration in India:
– There is no external intervention in the management of the company.
– It’s simple to give loans to or borrow money from group members.
– Easy to handle.
– Capital requirements are minimal.
– The number of compliances has been reduced.

Annual Tax Compliances of Nidhi Company

The important Nidhi Company annual compliances are categorized into three categories:
1) Pre-Incorporation Compliances.
2) The second category is Post-Incorporation Compliance.
3) The third type of compliance is event-based compliance.

1. Nidhi Company Pre-incorporation Compliances

To complete the Online Nidhi Company Registration process in India, every Nidhi Company must comply with certain requirements.

The following are the compliances that must be met:

a) A minimum of seven members is required to form a Nidhi Company, with three of those individuals serving as Directors.
b) To register a Nidhi Company in India, a minimum of Rs. 5 lakhs in paid-up equity share capital is mandatory.
c) Preference shares should not be issued, and if they are, they should be redeemed according to the terms of the issue.
d) The term “Nidhi Limited” must be included in the name.
e) A minor is not permitted to join the Company.
f) The company will not admit a trust or a corporation as a member.
g) Cannot accept more than 20% of Net Owned Funds as a deposit.
h) The company is unable to open branches if it has gone three years without making a profit after taxes.
i) The interest rate on the loan cannot be more than 7.5 percent more than the highest rate of interest offered on deposits.

2. Nidhi Company Post-Incorporation Compliances

Nidhi Company compliance is classified into two categories after incorporation:
– General Compliances
– Annual Compliances

I) Must-Follow General Compliances for Nidhi Company

Within a year of incorporation of Nidhi Company, it must ensure the following compliances:
a) Within one year of its incorporation, the number of members should have increased to at least 200.
b) The Net Owned Fund should be worth at least Rs. 10 lakhs.
c) The Net-owned Funds to Deposits ratio must not be greater than 1:20.
d) The deposits must not be less than 10% of the outstanding deposits, according to Rule 14 of the Nidhi Rules, 2014.
e) Accounts payable and receivables payable and receivables payable and receive
f) Ensure that the statutory registers are kept up to date.
g) Call for Statutory Meetings to be held.

II) Must-Follow Nidhi Company Annual Compliances

The company’s activities and functional divisions are updated annually to keep the government informed.

1. Filing of Form NDH-1: Nidhi Company’s Annual Return

Within 90 days of the end of the financial year, every Nidhi Company must file Form NDH-1 with the ROC. This form contains all of the information about the members, loans, deposits, reserves, and so on for the whole financial year.

2. Filing of Form NDH-4

Every Nidhi Company is required to file form NDH-4 (once) for a declaration of its position as a Nidhi Company, as well as a statement that Nidhi has met the minimum number of required members of 200 and net owned funds of Rs. 10 lakhs, as well as other Nidhi Rules, 2014 compliance declarations.

3. Form NDH-2: Request for a Time Extension.

This form is completed if the firm fails to add at least 200 members within the first year of its existence. Failure to maintain a 1:20 ratio of Net Owned Funds to Deposits. Within 90 days of the end of the fiscal year, the NDH-2 must be filed with the Regional Director, together with the required fees.

4. Filing of Form NDH-3: Half Yearly Return by Nidhi Company

Within 30 days at the end of each half-year, every Nidhi Company must file Form NDH-3 with ROC i.e. the 30th of April for the half-year ending on the 31st of March and the 30th of October for the half-year finishing on the 30th September. Form NDH-3 includes information such as the number of members admitted during the half-year, the number of members who ceased to be members, and the total number of members as of the date, the loan provided by the Nidhi business against the specific security, and the deposits accepted by the Nidhi company from its members. The Company Secretary of CA, CMA in Practice should certify Form NDH-3.

5. Financial Statements Filing (Form AOC-4)

Within 30 days of the company’s Annual General Meeting, every Nidhi firm must file its Financial Statements, along with the Notice Calling General Meeting, Directors Report, Auditors Report, and Balance Sheet, with the ROC.

6. Annual Return (Form MGT-7)

Within 60 days after the date of the Annual General Meeting, every Nidhi firm must file its Annual Return along with a list of its members.

7. By September 30th, ITR-6 Income Tax Returns must be filed.

8. Resolutions Reporting

Nidhi Company is obliged to file Form MGT-14 for Disclosure of Directors Interest, Approval of Financial Statements, and Directors Report as a Public Limited Company.

3. Nidhi Company Event-Based Compliances

Event-based compliances are often only required to be filed once throughout the company registration procedure. These regulations must also be followed when there are non-periodic changes in the Nidhi company’s structure.
The following is a list of compliances that are based on events:
a) Any name changes for the company.
b) When there has been a change in the address of the registered office.
c) Director’s appointment, resignation, or removal.
d) Auditor appointment, resignation, or removal.
e) Any change in the company’s mission.
f) Shares are transferred.
g) Increase in the company’s authorized capital.
h) Key Managerial Personnel are appointed.
i) Any other modifications that are triggered by an event.

NIDHI COMPANY MINIMUM MEMBER AND NET OWNED FUNDS REQUIREMENTS:
– Within one year of incorporation and throughout the all-time thereafter, every Nidhi company should have at least 200 members.
– Within one year of incorporation, every Nidhi Company shall have Net-owned funds of Rs. 10 lakhs.

A NIDHI COMPANY’S MAXIMUM LOAN TO ITS MEMBERS IS:
– Where the total amount of deposits from its members is less than Rs. 2 crores, the amount is Rs. 2 lakhs.
– Rs. 7.50 lakh, if the total amount of deposits from its members exceeds Rs. 2 crores but is less than Rs. 20 crores.
– Rs. 12 lakhs if the total amount of deposits from its members exceeds Rs. 20 crores but falls short of Rs. 50 crores rupees.
– Rs. 15 lakhs, with a total deposit amount of more than Rs. 50 crores from its members.
– If Nidhi has not been profitable for three consecutive financial years, no new loans exceeding 15% of the aforesaid amount can be made.
– Members who have defaulted on a loan from Nidhi will not be permitted to take out new loans from Nidhi.
– Nidhi Company loans are only available to Nidhi Company members.

NIDHI COMPANY’S INTEREST RATES ON LOANS
The rate of interest imposed on Nidhi’s loans should not exceed seven and a half percent (7.5%) above Nidhi’s highest rate of interest offered on deposits i.e., the gross margin that a Nidhi Company can achieve from its operations is 7.5 percent.

Consequences of Non-compliance

Every Nidhi bank registration is required to file compliances on a timely basis. Nidhi Bank Operators face penalties if they do not comply.
a) If the corporation fails to comply, the organization and the officers responsible would face a punishment of up to Rs. 5,000.
b) If the infraction continues, the corporation may face a fine of Rs.500 each day.
c) As a result, hiring professionals to assist with compliance procedures is critical.
d) As a Public Limited Company, every Nidhi Company is required to conform with the terms of the Companies Act, 2013, and the Nidhi Rules, 2014 (i.e., Nidhi Company ROC Filing) unless exempted from compliance with particular sections with or without modification.

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