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CS Professional · Compliance Management, Audit and Due Diligence · Non-Compliances, Penalties and Adjudications

Sharma Crafts Private Limited is a recognised start-up company under the Companies Act, 2013. It filed its annual return late, and the penalty under section 92(5) for the company would otherwise be Rs 1,20,000. Under section 446B, what is the maximum penalty on the company?

The maximum penalty is Rs 60,000. Section 446B allows a start-up company a penalty of not more than one-half of the specified penalty, subject to a cap of Rs 2 lakh for a company. Half of Rs 1,20,000 is Rs 60,000, within the cap.

  1. ARs 60,000Correct
  2. BRs 1,20,000
  3. CRs 2,00,000
  4. DRs 30,000

Explanation

Section 446B caps the penalty at one-half of the penalty specified, subject to Rs 2 lakh for a company. Half of Rs 1,20,000 is Rs 60,000, which is below the Rs 2 lakh cap. Rs 1,20,000 ignores the concession.

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