Vakilsearch has simplified the process of meeting Annual Compliance for a Section 8 Company. Annual Compliance includes annual return filing, filing of financial statements, Income Tax Returns, and professional advice on call.
We file your annual returns and prepare the minutes of board meetings.
We issue share certificates and update the statutory registers.
We file directors’ disclosures to the Registrar.
A Section 8 company is formed with the objective of promoting commerce, arts, science, sports, education, research, social welfare, and protection of the environment. in a country. Though they are authorized to run a business and earn a profit, the profit can only be utilized for meeting company objectives, and cannot be shared among the members.
All the benefits of a Section 8 company, such as the ability to raise funds in the form of donations and contributions achieved through 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 fulfill 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.
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 annual financial filings of the company.
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 every six calendar months.
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.
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 applicable to income tax. The compliances to be fulfilled to claim such an exemption are:
Non-compliance may lead to penalties ranging from Rs.25,000/- to Rs.5,00,000/- and/or imprisonment.
Can a Section 8 company be converted into another type of company?
Yes. However, it can be only done as per the rules specified by the Ministry of Corporate Affairs.
Can Section 8 Companies claim full tax exemption?
Yes. By fulfilling the conditions specified by the relevant provisions under the Income Tax Act, Section 8 Companies can claim full exemption.
Can section 8 Companies issue dividends to its members?
A 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.
What is the penalty for failure to appoint an Auditor within the prescribed time?
Failure to appoint an Auditor is punishable with a fine of Rs. 25,000 which may extend up to Rs. 5,00,000.
What is the penalty for the non-filing of a Director’s consent form with the RoC (Registrar of Companies)?
Failure to file Director’s Consent notice is punishable with a fine up to Rupees 50,000 or imprisonment up to six months.
What happens if I don’t file my Annual Returns?
Failure to file Annual Returns is punishable with a fine of Rupees 50,000 which may extend to Rupees five lakh.
What is the penalty for non-compliance of requirements on the Annual General Meeting?
Is there any condition to claim tax exemption?
Yes, you need to register your company with the Commissioner of Income-tax to be eligible for tax exemption.
Can I claim tax exemption without registration?
No. If your company is not registered with the Commissioner, the tax will be levied on par with other types of companies, at 30%.
Can A Section 8 Company accumulate profit without paying taxes?
Yes. A Section 8 Company is allowed to accumulate or set apart (up to 15%) of its total income without paying tax.
We provide access to reliable professionals and coordinate with them to fulfill all your legal requirements. You can also track the progress on our online platform, at all times.
By handling all the paperwork, we ensure a seamless interactive process with the government. We provide clarity on the incorporation process to set realistic expectations.
With a team of over 300 experienced business advisors and legal professionals, you are just a phone call away from the best in legal services.
MCA has launched 2 schemes- Companies Fresh Start Scheme and Revised LLP settlement scheme. There is a waiver of the penalty of up to Rs 107800 for 1 year and Rs 136900 for 2 years till 30th September.