DIR-3 KYC compliance form in India is a statutory requirement made under the regulation of the Ministry of Corporate Affairs (MCA) for maintaining up-to-date and accurate information of company directors. This form has been released primarily to verify the personal details of company directors and to enhance transparency in the field of corporate governance.

Active DIN: Timely submission of Form DIR-3-KYC is necessary to maintain an "active" status of a director’s DIN. Non-compliance may lead to the marking of the company as inactive by the Ministry of Corporate Affairs (MCA). An active DIN holder can take the director position in new companies or act as the designated partner in a new limited liability partnership (LLP) at any given time. They will use their Active DIN to authenticate a variety of forms.

A DIN (Directors Identification Number) is a unique identification number. It is awarded to those assuming or already holding directorships in a corporate body. Previously, professionals had to file an application in eForm DIR-3 to obtain DIN. This was intended as a one-time process for an individual wishing to act as a director in one or more companies. Services Plus provide all the essential and key detailed processes to obtain the DIR 3 KYC compliance in India.  

Benefits Of DIR-3 KYC

• Updating Director’s Information in MCA Database: Director KYC summed up the steps to routinely submit in Forms DIR-3-KYC for maintaining an updated record of directors as well as altering the same in MCA Database.
  
  
• No Heavy Penalty: In case a director's DIN is deactivated for non-filling of DIR-3-KYC, for reactivation of DIN, such a director has to pay a penalty of Rs. 5000. Submitting this form on time is a sensible strategy to avoid heavy financial penalties.
  
  
• Direction detail: DIN when there is a default in filling out the form DIR3-KYC by the director, the Ministry of Corporate Affairs (MCA) marks the director’s DIN as “Deactivated”.
  
  
• New Companies/LLPs: The impacted director or designated partner cannot form any new companies or LLPs pending reactivation of their DIN.
  
  
• No use of DIN: A person is not able to use their DIN for filing ROC returns for the company/LLP he was attached to, which includes transferring the charge or changing directors/ appointing auditors, etc. The company or LLP can be dissolved if it does not comply with the regulations imposed by the ROC.
  
  
• Fund Raising and Loans: The company or LLP's fundraising and loan proposal can be adversely impacted by the deactivated DIN status, which can hamper the financial prospectus of the corporation.

Taxation Process Of DIR-3 KYC Compliance

So actually, the DIR-3 KYC form is not related to taxation; it is a compliance form filling that comes under the Companies Act, 2013. But failing to do so can lead to penalties that could be costly. Here are some of the taxation and financial features related to DIR-3 KYC.

Filing Fees for DIR-3 KYC

(If filed before the due date: No government fee will be charged as DIR-3 KYC compliance is submitted before the prescribed due date (usually, the prescribed date is 30th September of every financial year).

After the Due Date: You must pay ₹5,000 as a penalty if you report the form after the due date.

Penalty for Non-Compliance

If the form DIR-3 KYC is not filed by the deadline prescribed, the DIN holder's DIN is activated and marked as 'Deactivated' due to non-compliance.

Only after payment of the penalty fee (₹5,000) and the successful form submission can the DIN be reactivated.

Implications of Tax Deducted at Source (TDS)

So if the DIN of a director is inactive, the financials and TDS across sections 192 (for salary income) or Section 194J (for professional fees) may not be maintained correctly, leading to problems in remuneration or sitting fees and relevant TDS against them being filed.

This might result in TDS not being deducted or a higher amount of TDS being deducted, which will involve further compliance actions subsequently.

GST and Corporate Tax Impact

Directors receiving remuneration in the capacity of employees will be taxed under the normal tax slabs and will have income tax (IT) deducted.

If a director is providing professional services to the company, then GST will be applicable on that (Rs 20 lakh threshold for services).

This compliance is important for all directors, as non-compliance with the provisions of DIR-3 KYC may have an impact on financial reporting and corporate tax filing since the directors are responsible for approving the financial statement, its return, and all documents that require signing by the directors of the company.

Correction of Mistakes and Reporting Taxes

Filing miscellaneous details incorrectly in form DIR-3 KYC can involve extra penalties and compliance burdens.

To avoid discrepancies in income tax return (ITR) and corporate filing of companies, companies should ensure that details of directors are up to date.

Documentation for DIR -3 KYC Compliance

• Scanned copy of PAN card.
• Scanned passport copy (mandatory for foreign nationals and Indian nationals, if available)
• Scanned copy of Aadhaar card (mandatory if you are an Indian citizen).
• Proof of permanent and current address (choose among):
• Driver's License
• Voter ID (Election card)
• Passport
• Aadhaar card
• Ration card
• Electricity bill
• Telephone bill.

The documents to be provided for Indian applicants should not be older than 2 months from the date of form submission. For foreign applicants, proof of address should not be dated more than 1 year from the date of form submission.

How to File DIR-3 KYC?

The DIR-3 KYC is an annual compliance for every director having a Director Identification Number (DIN). It helps maintain the details of directors in the records of the Ministry of Corporate Affairs (MCA), India. Here are the steps for filing DIR-3 KYC:

1. Decide What Filing Status to Use

DIR-3 KYC depends on previous filings in two ways:

1. It is to be filed online under eForm DIR-3 KYC on the MCA portal in case the director is filing for the first time or seeking to change personal details.
2. Where DIR-3 KYC has been previously filed and there are no changes in details, the DIR-3 KYC can be done online through the MCA web service.

      2. Required Documents for Filing

Following are the documents that the director must have to complete the DIR-3 KYC process:

• PAN Card (Required for Indian citizens)
•  Aadhaar Card (linked with the mobile number)
•  Passport (required for foreign nationals)
•  Voter ID/Driving License (not mandatory but advisable)
•  Personal Mobile Number and Email ID (OTP verification)
•  Recent Address Proof (Electricity bill, bank statement, etc.)
•  Director’s Digital Signature Certificate (DSC)
•  Undertaking by Practicing Professional (CA/CS/CMA)

Steps to File DIR-3 KYC eForm

If the director is a first-time appointee or if you are updating details, follow this:

Step 1: Download the eForm.

Go to the MCA Portal and download the DIR-3 KYC eForm from the ‘Company Forms’ section.

Step 2: Enter Required Details

• DIN of the Director to enter (it should be in ‘Approved ' status).
• The name should be your full name as in your PAN card.
• Enter Father’s Name.
• Enter Nationality and Date of Birth.
• If you are a resident student, the permanent residential address.
• Provide your personal email ID and mobile number (Aadhaar linked).
• Upload proof of address and ID documents.

Step 3: OTP Verification

A one-time password (OTP) will be sent to the registered mobile number and e-mail of the director.

Provide the OTPs for verification.

Step 4: Attach Digital Signature (DSC)

Director's digital signature  (DSC) on the form.

It should also be certified by the practicing CA / CS / CMA.

Step 5: Submit the E- Form on MCA Portal

DIR-3 KYC eForm Upload Going to ensure that the log in is done on the MCA portal.

Chalk up the applicable fee (₹0 if before the deadline, ₹5,000 if you’re late).

Step 6: To File DIR-3 KYC Web

If the director has filed form DIR-3 KYC in earlier years and details have not changed,  then he can file through MCA web-based service:

1: Login to MCA Portal

    Now, log in to the MCA Portal using your credentials.

2: Click on ‘DIR-3 KYC Web

   Click on ‘MCA Services’ → ‘DIR-3 KYC Web.’

3: Fill DIN and verify OTP

• Enter the DIN number.
• The system would auto retrieve details submitted earlier.
• Authenticate the OTP delivered to your registered email and mobile number.

4: Submit the Form

    Fill all details in the online form and submit it. Do not require any DSC or  professional certificate.

Post Submission Process

• When submitted successfully, an SRN (service request number) will be generated by the MCA.
• A confirmation e-mail will be sent to the Candidate ID.
• The DIN status would remain Active if the form is filed within the due date.

Late Filing & Penalties

• The due date is generally 30th September of every financial year.
• Late Filing Penalty: A late fee of ₹5,000 is charged for filing after the due date.
• DIN Deactivation: Non-filing of return would lead to marking of the status of DIN as ‘Deactivated’ on account of non-compliance.

DIR-3 KYC is an annual compliance for all directors. First-time filers or those updating their details will need to use the eForm method, while the web KYC method is for the individuals where there are no changes. It will prevent the DIN from being non-active and avoid penalties and other consequences.