Annual Compliances for Section 8 Companies

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What are Annual Compliances for Section 8 Companies?


All the benefits of a Section 8 company, such as the ability to raise funds in the form of donations and contributions come easily with disciplined compliance.

A Section 8 company is a form of NGO registered under the Companies Act, 2013. According to which all Section 8 companies must adhere to the compliance levied by Registrar of Companies (RoC) and Income tax authorities. . Failure to fulfil their compliance requirements results in paying heavy penalties (up to Rs. 1 lakh a year) and chances are such organizations and their directors’ may even get blacklisted for a period of time.

Section 8 company:


A Section 8 company is formed with an objective of promoting commerce, arts, science, sports, education, research, social welfare, protection of the environment in the country. Though they are authorised to run business and earn a profit, the said profits can be utilised only towards the objectives and cannot be shared among the members.

Immediate compliance after incorporation


Appoint auditor within 30 days:

A Section 8 company is required to appoint the First Auditor within 30 days from the date of its incorporation to take care of all financial filings of the company annually.

Conduct meeting for the Board of Directors within 30 days:

The first meeting of the Board of Directors must be conducted within 30 days from the date of incorporation. Thereafter, the Board of Directors shall hold at least one meeting within every six calendar months.

Annual General Meeting:

A Section 8 company must hold its first Annual General Meeting (AGM) within nine months from the close of the first financial year of the company.

Compliances for Section 8 companies


  • Notice as to the appointment of Auditor within 15 days of the appointment - Form ADT-1
  • 2Director’s Consent Form to hold office within 30 days from the Director’s appointment-Form DIR 2
  • Returns as to the appointment of Managing Director, manager or key managerial person within 60 days from their appointment - Form MR-1

Reports on Annual General Meetings


  • A copy of audited financial statement to be sent to the members of the company, 30 days before the date of the meeting - Form AOC- 3
  • A report on AGM held within 30 days of the meeting must be submitted - Form MGT - 15
  • A Section 8 company is required to submit a copy of the financial statements adopted in Annual General Meetings within 30 days of the meeting - Form AOC- 3 & 4
  • The minutes of the meeting or MoM shall be recorded within 30 days from the conclusion of the meeting
  • It is mandatory for Section 8 companies to file Annual Returns within 60 days from the date of the AGM - Form MGT - 7

Exemptions available for Section 8 companies:


  • No requirement of minimum paid up share capital and appointment of Company Secretary
  • Non-applicability of the maximum number of Directors
  • No requirement of Independent Director
  • Directorship in Section 8 company does not count for the maximum number of Directorship of a Director.
  • No requirement for the constitution of nomination & Remuneration Committee and Stakeholder Relationship Committee

Penalties for Non-compliance:


Non-compliance may lead to a penalty punishable with a minimum fine of Rs.25,000/- up to Rs.5,00,000/- and/or imprisonment.

Tax compliance


A Section 8 company is liable to pay corporate tax as prescribed by the Income Tax Act. But, it can claim certain income to be excluded in calculating the total income which is chargeable to income tax. The compliances to be fulfilled to claim such an exemption are:

  • The Section 8 company shall be registered under Section 12A of Income Tax Act with the Principal Commissioner using form 10A
  • It must comply with the conditions specified under Section 11 so as to be eligible for the exemption
  • The company has to be approved under Section 80G through Form 10B

Why Vakilsearch


12 MONTHS' SERVICE

We complete all the compliance requirements of a Section 8 company for a fraction of the price charged by offline company secretaries through the use of our powerful tech platform.

9.1 Customer Score

We make your interaction with the government as smooth as is possible by doing all the paperwork for you. We will also give you absolute clarity on the process to set realistic expectations.

160 Strong Team

Our team of experienced business advisors are a phone call away, should you have any queries about the process. But we'll try to ensure that your doubts are cleared before they even arise.

FAQs on Annual Compliances for Section 8 Companies


Yes, the same shall be in accordance with the rules notified by the Ministry of Corporate Affairs.
Yes, by fulfilling the conditions specified by the relevant provisions under the Income Tax Act, it can claim full exemption.
Section 8 Company can be incorporated as a company limited by shares or guarantee with or without share capital. Irrespective of the category of the company, a Section 8 company cannot issue dividends to its members.
Failure to appoint Auditor is punishable with a fine of Rs. 25,000 which may extend up to Rs. 5,00,000
Failure to file Director’s Consent notice is punishable with fine up to Rupees 50,000 or imprisonment up to six months
Failure to file Annual Returns is punishable with a fine of Rupees 50,000 which may extend to Rupees Five Lakh
- Failure to send a copy of audited financial statements to the members before the Annual General Meeting and record the minutes of the meeting is each punishable with a fine up to rupees 25,000
- Failure to conduct Annual General Meeting is punishable with a fine up to Rupees one Lakh
- Failure to submit a report on Annual General Meeting is punishable with a fine of Rupees one Lakh which may extend to Rupees five Lakh
Yes, you need to register your company with the Commissioner of Income tax to be eligible for tax exemption.
No. If your company is not registered with the Commissioner, you will be leived tax on par with other types of companies i.e. at 30%.
Yes. It is allowed to accumulate or set apart up to 15% of its total income without paying tax.
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