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Annual Compliances for Section 8 Companies

A Section 8 company is a form of NGO that is formed to promote research, religion, social welfare, etc. Under Companies Act, 2013 all Section 8 companies in India are required to comply with the statutory requirements of the Ministry of Corporate Affairs (MCA).

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How To Get Annual Compliances Done For Section 8 Companies Done?

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.

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Returns & Minutes Filing

We file your annual returns and prepare the minutes of board meetings.

Step 1

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Issuing Certificates

We issue share certificates and update the statutory registers.

Step 2

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Drafting & Filing Financials

We file directors’ disclosures to the Registrar.

Step 3

What are Section 8 Companies?

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.

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What Are The Benefits Of Section 8 companies?

benefits of section 8

Checklist For Annual Compliance

  • Appointment of An Auditor:Under section 139 of the Companies Act 2013, it is mandatory for companies to appoint an auditor. The book of accounts and annual returns of the company shall be maintained.
  • Maintenance of A Register:The company shall maintain a statutory register consisting of loans obtained, charges created, its members, etc as enumerated under section 8 of the companies act 2013.
  • Convening Meeting:Annual general body meeting and other statutory meetings have to be conducted.
  • Report by Directors:Directors of the company shall file their annual report in an appropriate manner, consisting of fiscal data and corporate social responsibility. The board directors are responsible for this report.
  • Financial Statement of The Company:The balance sheet, profit and loss A/C, cash flow statement and other financial statements to be filed by the company for the previous financial year.
  • Tax Returns:At the end of every assessment year, before 30th September, tax returns are to be filed.
  • Filing of Financial Statements:The financial statement shall be filed in the appropriate form ( E-FORM AOC-4), within 30 days from the last general body meeting,
  • Filing Returns:Limited companies need to file the Form MGT-7 with Registrar of Companies (RoC), for filing returns within 60 days of the annual general meeting.

What Are The Compliances For A Section 8 Company?

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.

Compliances for Section 8 companies

  • Notice as to the appointment of Auditor within 15 days of the appointment - Form ADT-1
  • Director’s consent form (Form DIR 2) to occupy the office within 30 days from the director’s appointment.
  • Returns form (Form MR-1) within 60 days from the appointment of Managing Director, manager or key managerial person

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 annual financial filings of the company.

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 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.

What are the Tax Compliances for a Section 8 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:

  • The Section 8 company shall be registered under Section 12A of the 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.

What are the Penalties for Non-compliance:

Non-compliance may lead to penalties ranging from Rs.25,000/- to Rs.5,00,000/- and/or imprisonment.

FAQs on Annual Compliances for Section 8 Companies

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Recent Updates

30th March: Relief measures announced by Government to incentivize compliance

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.

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