Annual Compliances of Section-8 Companies |

Annual Compliances of Section-8 Companies

A Section 8 Company is a Non-Governmental Organization (NGO) and one of the most preferred forms of NGO in India. It is registered under the Companies Act, 2013; and hence, it must follow the compliances prescribed under this concerned Act.

Why It is required to follow Annual Compliance for Section 8 Company?

Transparency in the Company’s Operations

Better Credibility

Avoid Legal Complications

Build Trust

Avoid Penalties

Mandatory Compliance for Section 8 Company

Appointment Of Auditor

Section 8 company must appoint an auditor to take care of their financial recordings every year.

Maintaining Registers

Section 8 company must appoint an auditor to take care of their financial recordings every year.

Maintenance of Books of Accounts

Every Section 8 Company is obligated to maintain the books of accounts of the company. The books of accounts keep the records of the annual returns filing, etc.

Preparation of Financial Statements

Section 8 Company needs to prepare its financial statements. Financial statements are a record of financial transaction that occurred in the company.

Director’s Report

Director’s report is the document that consists of the info regarding the company and its compliance along with a set of financial, accounting, and corporate social responsibility. The Board of Directors is responsible for producing this report. As per the provisions of the Companies Act, 2013, producing director’s report is compulsory compliance for every Section 8 Company in India.

Conducting Statutory Meetings

Companies registered under Companies Act, 2013 need to convene statutory meetings every year on certain intervals. Statutory meetings include meetings of Shareholders, Board of Director’s meeting, etc.

Board meeting of every company should be held twice a year in case of small companies. The gap between the two meetings should not be more than 90 days.

Annual General Meeting of the Section 8 Company should be held yearly on or before 30th September. It is necessary for all the directors, members, and auditors to attend the meeting. They should be notified regarding the meeting by giving not less than 21days clear notice. Form MGT-15 is used to submit the report of Annual General Meeting. The report must be submitted within 30 days of conducting the meeting.

Income Tax Returns Filing

It is imperative for every Section 8 Company to file income tax returns before or by 30th September of the next financial year. It is necessary to file income tax returns because it gives an overview of the total

Filing of Financial Statements (AOC-4)

Every Section 8 Company needs to file a copy of the financial statements in the prescribed format, i.e. in the e-form AOC-4. The financial statement must be filed within thirty days from the date of the last annual general meeting held.

MGT-7, Filing of Annual Returns with ROC

Since Section 8 Companies are registered as limited companies, therefore, they too need to file –form MGT-7 with the ROC for filing annual returns of the company. MGT-7 must be filed within sixty days from the date of the last annual general meeting was held.

Due Dates for Section 8 Company Compliances

COMPLIANCE DUE DATE

AGM (Annual General Meeting) 30TH September

AOC-4 Within 30 days of AGM

MGT-7 Within 60 days of AGM

Income Tax Return; 30th September

Tax Compliance for Section 8 Companies

Section Company is bound to pay corporate tax as mentioned in the Income Tax Act. However, certain exemptions are given to the Sectio 8 Compliance under taxation by fullfilling following conditions:

Section 8 companies must be registered under Section 12A of the Income Tax Act, with the Principal Commissioner using form 10A.

It must adhere to the conditions mentioned in the Section 11 if the company wants to fall under the criteria of eligibility for the exemption.

Section 80G must approve the company through Form 10B

Penalties for Non-Compliance

The MCA has the authority to impose certain penalties in case it confronts any non-compliance with the procedures.

Penalties to be imposed are as follows:

The Central Government may disavow the permit allowed to the organization on the off chance that it finds that the organization is working falsely or in a way violate to the object of the organization.

The organizations will be liable to pay fine, which will not be under 10 lakhs rupees and can be stretched out to 1 crore rupees.

The chiefs and each official of the organization who is in default will be liable for detainment for a term which may stretch out to 25 lakh rupees or with both.

In the event that it is discovered that the issues of the organization were directed falsely, every official in default will be at risk for activity under area 447.

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