A Section 8 company is a non-governmental organization that was created to support a variety of endeavors, including sports, business, charity giving, the arts, science, and more. These companies have been registered to aid India’s communities with limited resources and industries. In this blog, we will discuss Compliance for Section 8 Company under Companies Act 2013.
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What does mean by Section 8 Company?
An NGO is established when a business or organization decides to use its profits to further the humanities, education, charity, environmental preservation, sports, science, and religion. Section 8 company are considered limited companies despite not having the word “Limited” at the end of their name.
Advantages of Section 8 Company
Anyone wishing to launch a non-profit company has a lot of benefits accessible to them through Section 8 Companies. These consist of:
- Greater flexibility and a disciplined environment for methodical non-profit goal execution are features of Section 8 Companies.
- Since Section 8 Companies are registered under the Companies Act, there is no requirement for the physical presence of partners or members during the registration process.
- No minimum or maximum paid-up capital requirements apply to Section 8 Companies.
- Section 8 Companies are eligible for tax advantages under Sections 12AA and 80G of the Income Tax Act, which can significantly lower the organization’s tax liability.
- It can be advantageous for anyone looking to have a good social impact through their job to be a member or partner of a company or firm that holds a directorship of a Section 8 Company.
Annual Filing of Section 8 Company
Annual Filing of Section 8 Company consists of a number of Annual Compliance for Section 8 Company. In this blog we will talk about the various Compliance for Section 8 Company under Companies Act 2013.
Auditor Appointment via Form ADT-1
For Section 8 Companies Annual Filing and its financial reporting, every section 8 company must employ an auditor to manage it, according to Section 139 of the 2013 Companies Act. The Ministry of Corporate Affairs (MCA) must be notified of the appointment of the auditor and provided with their information using Form ADT-1 as a part of Section 8 Company Compliances. The auditor shall be retained for a maximum of five financial years, during which time they will annually review the company’s financial statements. Within 15 days of the annual general meeting (AGM), the auditor must be chosen. Penalties will apply if the company misses the deadline for submitting the Form ADT-1.
INC 20A for Section 8 Company
INC 20A for Section 8 Company is Declaration for commencement of operations is required to be filed by section-8 companies within 180 days of incorporation.
Maintenance of Statutory Register
Companies are required to keep a register that includes information on loans they have received, information on their directors, changes to their board of directors, charges they have established, and investments they have made under Section 8 of the Companies Act of 2013.
Annual general meetings for section 8 businesses must be held twice year, along with other statutory meetings.
Board of Directors Reports:
The Director’s Report, which includes details on the company’s compliance, corporate social obligations, accounting, and other annexures, must be prepared by the directors of the company. The AOC-4 Form is the one the most important Annual Filing Forms for Section 8 Company and the board report must be submitted together.
Making of Financial Statements:
A balance sheet, profit and loss statement, cash flow statement, and other financial statements that must be filed with the Registrar of Companies (ROC) and audited by the auditor must be prepared by the company.
Financial Statements Filing:
Financial statements of company submitted to MCA through Form AOC-4 which is one the most important Annual Filing Forms for Section 8 Company, if not submitted within 30 days of the AGM date, the company will be fined.
Annual Returns Filing:
MGT-7 is another most important Annual Filing Forms for Section 8 Company If the MGT-7 Form is not submitted within 60 days of the AGM date, the company will be fined.
Income Tax Return Filing:
Section 8 companies must submit their income tax returns by September 30 of each year in order to offer a breakdown of their total income.
Penalties for Compliance for Section 8 Company under Companies Act 2013
Like other registered companies, Section 8 companies are subject to specific laws and restrictions. They risk punishment if they do not abide by these rules. The following are the consequences of non-compliance for a Section 8 Company:
- The Central Government may revoke the company’s license if it finds that it is acting dishonestly or contrary to its stated objectives.
- The corporation may be subject to fines of up to one c rore rupees, with a minimum fine of ten lakh rupees.
- In defaulting, the directors and every officer of the company are vulnerable to jail and fines of up to Rs. 25 lakhs.
- Every officer in default will be held accountable for their acts under Section 447 of the 2013 Companies Act if it is determined that the company’s operations are conducted fraudulently.
Therefore, it is crucial for Section 8 Companies to abide by all rules in order to avoid paying fines. They can continue to fulfil their separate goals and preserve their legal standing by doing this.
Due Dates for Annual Filing of Section 8 Company
Due Dates for Annual Filing of Section 8 Company are listed below:
- AOC-4 – 30 days following the AGM – 29th October
- MGT-7 – 60 days following the AGM – 28th November
- Form ITR-6 Income tax returns – 30th September
Event-based Section 8 Company Compliances
As suggested by the name, Event-based Section 8 Company Compliances are those that need to be documented when there are specific occurrences. These are non-periodic compliances as opposed to Annual Compliance for Section 8 Company under Companies Act 2013.
Checklist for Event Based Section 8 Company Compliances:
- transfer of shares
- distribution of shares
- Directors’ Nomination/Resignation
- Auditors’ Appointment/Resignation
- change in the company’s name
- change in the company’s MOA
- Selection of Important Managerial Personnel
- Any modification to the organization’s structure
Tax Exemption Compliance for Section 8 Company under Companies Act 2013
Section According to the Income Tax Act, a company is required to pay corporate tax. However, the Company is able to exclude some of its income from income tax by taking specified steps. The following requirements must be met by Section 8 Company in order to consider such exemptions:
- According to Section 12A and 80G of the Income Tax Act, Section 8 companies are required to register with the Income Tax using Form 10A in order to claim exemptions.
- If the company wants to meet the requirements for exemption eligibility, it must follow the rules outlined in Section 11.
In summary, Section 8 companies are non-profit or non-governmental entities that use their earnings to further a variety of social goals. By following Section 8 Company Annual Filing standards, these companies can gain much and stay out of potential trouble by doing so. It is advised that you incorporate the organization as a Section 8 company rather than a trust or society for this reason.