Company Strike Off vs Winding Up — Differences, Process (2026)
Company strike off vs winding up — differences, process, when to use. Strike off: simple, low cost. Winding up: complex, for defaulting companies.
When a business is no longer needed, the company must be closed formally. There are 2 main ways: strike off (fast-track, simple) or winding up (formal, for defaulting companies). In this guide, we compare the two and explain the process.
When to Close a Company?
- Business is no longer operational
- No revenue / no transactions for 2+ years
- No intention to revive the business
- Merger / acquisition (target company is closed)
- No assets / liabilities (clean closure)
- Avoid compliance burden + annual cost
Strike Off (Section 248) — Fast Track
Strike off is a fast-track closure for defunct companies. ROC strikes the company off the register. Used for companies that are inactive for 2+ years, have no assets / liabilities, and have no pending compliance.
Winding Up (Section 271) — Formal
Winding up is a formal closure process for defaulting or active companies. The company's assets are realised, liabilities are paid, and the company is dissolved. Used when: company has assets / liabilities to settle, or there are pending legal disputes, or creditors want to wind up.
Comparison
| Parameter | Strike Off | Winding Up |
|---|---|---|
| Governed by | Section 248 (fast-track) | Section 271 (voluntary) / 273 (NCLT) |
| For | Defunct companies (inactive 2+ years) | Active or defaulting companies |
| Speed | 60-90 days | 6-12 months |
| Cost | ₹5K-₹15K | ₹1-5L+ |
| NCLT | No | Yes (for creditor winding up) |
| Assets / Liabilities | Must be nil | Can have assets + liabilities |
| Pending compliance | Must be cleared | Must be cleared |
| Tax filing | Final ITR + GST return required | Final ITR + GST return required |
Strike Off Process (Section 248)
Step 1: Settle All Liabilities
Pay all dues: bank loans, vendor payments, employee salaries, taxes, GST, TDS, PF, ESI. Transfer / sell any remaining assets.
Step 2: File Pending Returns
File all pending ROC returns (AOC-4, MGT-7), ITR, GST, TDS. Pay any pending fees + penalties.
Step 3: Board + EGM Resolution
Board + EGM pass Special Resolution to apply for strike off. File MGT-14.
Step 4: Apply to ROC
File Form STK-2 with the ROC. Attach: pending compliance proof, indemnity bond (from directors), statement of assets / liabilities.
Step 5: ROC Approval
ROC processes the application. May ask for additional documents. If satisfied, publishes a notice in the Official Gazette + strikes off the company.
Step 6: Final ITR + GST
File final ITR (GSTR-10 for GST) for the year of closure. Cancel GST registration.
Winding Up Process (Section 271)
Step 1: Board + EGM Resolution
Board + EGM pass Special Resolution for winding up. Majority required.
Step 2: File Petition to NCLT
File winding up petition to the NCLT. Include: reasons, financial position, list of creditors + shareholders.
Step 3: NCLT Hearing
NCLT hears the petition. May appoint a provisional liquidator. Hearing can take 6-12 months.
Step 4: Liquidator Appointment
NCLT appoints a Company Liquidator. The liquidator takes over the company's assets + records.
Step 5: Asset Realisation
Liquidator sells the company's assets, recovers dues, and prepares a list of creditors + amounts owed.
Step 6: Distribution
Liquidator pays creditors (secured first, then unsecured) + shareholders (residual). Final accounts prepared.
Step 7: NCLT Order + Dissolution
NCLT passes a dissolution order. Company is dissolved. Liquidator files final return with the ROC.
Cost
| Process | Cost |
|---|---|
| Strike off (defunct company) | From ₹9,999 |
| Strike off (active company, closure) | From ₹14,999 |
| Voluntary winding up | From ₹49,999 |
| NCLT winding up (creditor) | From ₹1,50,000 |
Penalty for Not Closing
- Annual compliance cost continues (₹15K-₹30K/year)
- Director KYC + DIN annual filing (penalty if missed)
- ROC can strike off the company (involuntary strike off) with higher penalty
- Director can be disqualified (Section 164)
- Bank account freeze + asset attachment
- Winding up by NCLT (creditor-initiated)
Frequently Asked Questions
Q: Strike off or winding up — which is faster?
A: Strike off. 60-90 days vs 6-12 months for winding up.
Q: Can a company with assets be struck off?
A: No. Strike off is only for companies with nil assets + liabilities. If you have assets, you must either transfer / sell them, or use winding up.
Q: Can a struck off company be revived?
A: Yes. Within 20 years. Apply to the NCLT + ROC for restoration. Process: 3-6 months.
Q: What if the company has pending GST / ITR?
A: Clear all pending returns + pay all dues before applying for strike off. ROC will reject if any compliance is pending.