Company Compliance Health Check

A statutory audit under Section 139 of the Companies Act, 2013 is a mandatory annual examination of the company's financial statements by an independent Chartered Accountant, primarily focused on financial accuracy and disclosure. A compliance health check is a broader diagnostic covering regulatory filings across MCA, income-tax, GST, labour law, and secretarial requirements. The two are complementary; the health check often identifies filings that the audit process does not examine.

The standard review covers the preceding three financial years, which aligns with the typical due diligence window used by investors and acquirers. For companies with longer histories or specific areas of concern, the review period may be extended to five or seven years. The limitation period under the Companies Act, 2013 for prosecution is three years from the date of default for most offences, though there is no limitation on additional fees for delayed filings under Section 403.

Under Section 403 of the Companies Act, 2013, filing a document after the prescribed due date attracts an additional fee of one hundred rupees per day for each day of delay, with no cap on the total accumulation. For annual returns under Section 92, persistent non-filing also exposes the company and its directors to prosecution under Section 92(5), which can result in a fine of up to five lakh rupees and imprisonment of up to six months for officers in default.

Overdue MCA filings can generally be made at any time by paying the applicable additional fees calculated under Section 403, regardless of how old the default is. The Ministry of Corporate Affairs has periodically introduced amnesty schemes such as the Companies Fresh Start Scheme and Scheme for Relaxation of Time that cap or waive additional fees for a limited window. The practitioner will identify whether any such scheme is currently active and advise on the optimal filing strategy during the health check.

The GST review covers filing status and timeliness of GSTR-1 (outward supply details), GSTR-3B (monthly summary return), and GSTR-9 (annual return) under the Central Goods and Services Tax Act, 2017. It verifies reconciliation of input tax credit claimed against GSTR-2B, checks for any notices received from the GST authority, and confirms compliance with e-invoicing obligations under Rule 48(4) of the CGST Rules for taxpayers above the applicable turnover threshold.

Yes. The health check covers registration and monthly deposit compliance under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (applicable when headcount reaches twenty employees) and the Employees' State Insurance Act, 1948 (applicable when headcount reaches ten employees in most states). It also reviews Professional Tax registration in states such as Maharashtra, Karnataka, Tamil Nadu, and West Bengal, and Shop and Establishment Act registration in the applicable state.

The output is a structured written report typically organised as a compliance dashboard with colour-coded status indicators (compliant, delayed but remediable, penalty-accrued, critical) for each obligation, followed by a narrative section explaining the findings and a prioritised remediation roadmap. The report quantifies the estimated penalty exposure as of the date of the review and identifies the remediation steps required to achieve full compliance, including estimated costs.

Yes. The statutory auditor's mandate under the Companies Act, 2013 is limited to auditing the financial statements and issuing an audit report. While the auditor's report under CARO (Companies Auditor's Report Order) does address certain compliance matters such as TDS, EPF, and charges, it does not comprehensively review all secretarial filings, event-based forms, GST returns, or labour law registrations. The health check fills that gap and is a broader, purpose-built diagnostic tool.

Compounding under Section 441 of the Companies Act, 2013 is a process by which a company or its officers pay a sum to the National Company Law Tribunal or the Regional Director in lieu of prosecution for a compoundable offence. Not all offences are compoundable; only those not punishable with imprisonment alone or with both imprisonment and fine are eligible. Compounding resolves the criminal liability for past defaults and is particularly relevant for offences that are beyond the reach of simple additional-fee filings. The health check identifies which defaults are compoundable and assists with preparing the application.