Farmer Producer Company (FPC) Compliances
Farmer Producer Company (FPC) is a special company registered under the Companies Act, 2013, which works towards enhancing farmers' incomes through collective efforts. Even though an FPC has a series of advantages, it must adhere to some legal and financial compliances to continue its operations and avoid penalties. Knowledge of such compliances is essential for smooth operation and long-term development.
What is a Farmer Producer company?
A Farmer Producer Company (FPC) is a private limited company registered under the Companies Act, 2013, specifically established for the benefit of farmers by offering them the platform to operate as a whole. It is a mix of a cooperative society and a pvt limited company where the farmers can operate as a business and also enjoy legal and financial advantages.
1. Annual Compliances of FPCs
Like any other company, an FPC will have to comply with annual legal and financial reporting obligations. These are:
A. Filing of Financial Statements (AOC-4)
All FPCs are mandated to prepare and submit their financial statements, i.e., Balance Sheet, Profit & Loss Account, and Cash Flow Statement, to the Ministry of Corporate Affairs (MCA) in Form AOC-4. This must be done within 30 days from the date of the Annual General Meeting (AGM).
B. Filing of Annual Return (MGT-7)
An FPC must also submit an Annual Return on Form MGT-7. This is a form that includes shareholders, director, and other key company information. It is to be submitted within 60 days of the AGM.
C. Conducting Annual General Meeting (AGM)
An FPC must hold an AGM every year to discuss financial performance, approve accounts, and make important decisions. The first AGM must be held within nine months from the end of the financial year, and subsequent AGMs must be held within six months from the end of the financial year.
D. Appointment of Auditor
Every FPC will be required to appoint a statutory auditor within 30 days of its incorporation who will audit its books of accounts and report. The appointment will be required to be notified to the MCA in Form ADT-1.
2. Taxations and GST Compliances
A. Income Tax Return (ITR)
An FPC is required to file an Income Tax Return (ITR) annually. It is charged at the same rate as private limited companies (currently 25% for companies with turnover below Rs. 400 crore).
B. Goods and Services Tax (GST)
If an FPC has an annual turnover of more than Rs. 20 lakh (or Rs. 10 lakh in certain states), it has to register under GST. After registration, it has to:
File monthly or quarterly GST returns (GSTR-1, GSTR-3B, and GSTR-9).
Collect and remit GST on eligible goods and services.
3. ROC (Registrar of Companies) Compliances
The Registrar of Companies (ROC) ensures that companies operate legally. FPCs are mandated to file several ROC filings, such as:
DIR-3 KYC: Directors are mandated to file their KYC information with the ROC every year.
DPT-3: In case an FPC has received deposits from members, it must file this form.
BEN-2: Where there are significant beneficial owners, they shall be revealed.
4. Labour and Employment Compliances
If an FPC employs persons, it shall be governed by labor law, such as:
Employee Provident Fund (EPF): Compulsory when the firm is hiring 20 or more employees.
Employees' State Insurance (ESI): Mandatory if the company has 10 or more employees.
Minimum Wages Act and Payment of Bonus Act.
5. Record Keeping and Other Responsibilities
Apart from filing returns, an FPC should keep proper records, which include:
Agenda for Board meetings and AGM meetings.
Member shareholding and registration details.
Account books and bills of invoices.
Loan and investment accounts.
6. Sanctions for Non-Compliance
Failure to comply with legal rules can result in penalties:
Late filing of AOC-4 and MGT-7 can attract a fine of Rs. 100 per day.
Not filing an Income Tax Return could lead to penalties and additional taxes.
Failure to pay Goods and services tax can attract a charge of interest and penalty.
Failure to hold an AGM can lead to fines on the directors and the company.
7. Benefits of Compliance
While compliance might be perceived as cumbersome, it has several benefits:
Avoids fines and legal complications.
Increases credibility, making it simpler to secure grants and loans.
Enhances financial openness, drawing investors and stakeholders.
Ensures effective business management and government support.
Overview
Compliance is also a crucial aspect of running an FPC smoothly. Timely return filing, record maintenance, and legal compliance ensure smooth running and financial health. Professional assistance from a Chartered Accountant (CA) or Company Secretary (CS) can ease compliance and prevent undue legal hassles. Being compliant, an FPC can focus on its ultimate objective—helping farmers realize better incomes and growth. Join the Registration Guru for instant support and get your registration certificate. Our highly expert team will be available with you until your registration process will not complete.