As a business owner, you must balance a number of responsibilities, but one of the most important is making sure your company complies with all applicable state and municipal laws. According to the Companies Act of 2013[1], all Section 8 companies must file compliance with the MCA or Ministry of Corporate Affairs. The primary reason for forming Section 8 Company is to support, foster, and encourage efforts in science, art, athletics, charity, business, and so forth. Section 8 companies are generally classified as Non-Governmental Organisations. These companies enjoy being treated as ‘Limited Company’, but they are not obligatory to add ‘Limited’ at the end of the company’s name. In short, Section 8 companies aim to promote the needy sectors and communities in India. These Companies are not applicable to provide income or dividends to their partners or members. Let’s look at the compliance calendar for Section 8 companies.
A non-profit organisation may register under any of the three categories listed below to operate:
- Trust Registration by executing a Trust deed or
- Society Registration under the Registrar of Societies, or
- Section 8 Company under the Companies Act, 2013.
Key features of Section 8 Company
Following is the list of some benefits that are enjoyed by a Section 8 company:
- The minimum number of directors can be 2 or 3 depending on the type of company i.e. private or public, respectively.
- A firm can be a member of a section 8 company.
- It can use its profits/income to promote its objects only.
- Payment of dividends to its members is prohibited.
- It can not alter its memorandum except with the approval of the Central Government.
- Not required to add the word “limited” or private “limited” to its name.
Advantages of adhering to the compliance calendar for Section 8 Companies
Keeping up with compliances brings numerous advantages to any organisation; the benefits offered to Section 8 organisations are as follows:
- The companies look more trustworthy and credible in the eyes of potential investors.
- It helps companies avoid having to pay unnecessary penalties.
- The strict compliance of Section 8 companies ensures that there will be no legal issues in the future, allowing the business to operate smoothly.
List of mandatory Section 8 company compliances – Compliance Calendar for Section 8 Companies
List of annual compliances that Section 8 company must adhere to is provided below:
- To appoint an auditor.
A Section 8 corporation is required to hire an auditor to review and maintain its financial records and statements every year.
- To Conduct Board of Meeting
The Board of Meeting of the company shall meet twice a year, with at most three months or ninety days gap between the two meetings.
- File Income Tax Return
Section 8 companies are mandated to submit their IT Returns by September 30 of the prior financial year.
(Note: If a business is registered under Sections 12A and 80G, it is eligible for tax exemptions.)
- To Conduct an Annual General Meeting
Annual General Meetings must be held on or before September 30. The presence of all the directors, shareholders, members and auditors at the Meeting is necessary.
The Annual General Meeting report must be filed with Form MGT-15 within 30 from holding such a meeting.
- Filing of financial return with Registrar of Companies (ROC).
The company must file their financial reports and statements with E-form AOC-4. It must be filed within 30 days from the Annual General Meeting.
- Filing of Annual Return with Registrar of Companies (ROC).
The company must file their annual financial return with Form MGT-7. It must be filed within 60 days from the Annual General Meeting.
Event-based Annual Compliances for a Section 8 Company – Compliance Calendar for Section 8 Companies
The comprehensive list of annual compliances that Section 8 Company must adhere to is provided below:
- Compliances under the Companies Act, 2013 – Compliance Calendar for Section 8 Companies
| Form | Purpose | Due-date | Triggering Provision |
| INC- 20A | Declaration of commencement of business to ROC | Within 180 Days from the incorporation date | Section 10 A |
| MGT-6 | Intimation of the declaration received under Section 89 | Within 30 days from the receipt of the declaration by the company | Section 89(6) |
| BEN- 2 | Intimation of declaration received under Section 90 | Within 30 days from the receipt of the declaration by the company | Section 90(4) |
| DIR – 3 KYC | Directors’ KYC | 30th September | Rule 12A of Companies (Appointment & Qualification of Directors) Rules 2014 |
| ADT – 1 | Intimation of the appointment of a Statutory Auditor. | Within a time period of 15 days from the appointment of an auditor. | Section 139 |
| ADT – 1 | Notice to the Registrar for appointment of 1st Statutory Auditor | Appoint within 30 days from the incorporation date | Section 139(6) |
| ADT – 3 | Intimation concerning resignation of Statutory Auditor | Within 30 days from the Resignation date | Section 140 |
| MGT – 14 | Filing of Resolution and agreements as per Section 117 (3) | Within 30 days of the passing of such a resolution. | Section 117 |
| INC-22 | Intimation of Change in the Registered Office | Within 30 days of such change. | Section 12 |
| E-Form MSME-1 | Return with regard to outstanding payments to Micro or Small Businesses. | Within one month from the conclusion of each half year. | Section 405 |
| IEPF -2 | Declaration of Unclaimed and Unpaid Amounts as Per Section 125. | Within 60 days after the holding of the AGM | Rule 5 (8) of IEPF Authority (Accounting, Audit, Transfer & Refund) Rules, 2016 |
| DPT-3 | Return of deposit or particulars about a transaction that does not form a part of a deposit. | On or before 30th June 3 every year | Rule 16 of Companies (Acceptance of Deposits) Rules, 2014 |
| Form AOC-4/AOC-4 CFS/AOC-4 XBRL | Filing of annual accounts | To be filed within 30 days after the AGM’s conclusion | Section 137 |
| E – Form MGT – 7 | Filing of annual return | To be filed within 60 days after the AGM’s conclusion. | Section 92 |
| MBP-1 | Disclosure of Interest by Director. | At the first Board of meeting of the fiscal year | Section 184 |
- Compliance under the Goods and Services Tax (GST) Act, 2017
| Form | Purpose | Due-date |
| – | GST Registration | Within 30 days of crossing the threshold limit |
| GSTR-1 | Reporting of Outward Supply (in case turnover exceeds Rs. 5 Crore or person who has not opted QRMP scheme | By the 11th of the subsequent month. |
| GSTR-1 IFF | Reporting of Invoices (for the person who opted QRMP scheme) | By the 13th of of the subsequent month |
| GSTR- 3B | Payment of tax and filing of return having a summary of outward supplies, tax credits etc (for the person other than those who opted the QRMP scheme) | On a quarterly basis |
| GSTR-9 | Filing of GST Annual return (if turnover exceeds 2 crores) | By 31st December of subsequent year |
| GSTR-9C | Filing of GST reconciliation statement (if turnover exceeds Rs. 5 crores) | By 31st December of subsequent year |
- Compliance under Labour Laws
| Form | Purpose | Due-date |
| ECR | Payment of Provident Fund (PF) contribution | 15th of every next month |
| – | Payment of Employees’ State Insurance (ESI | 15th of every next month |
| – | Return of Employees’ State Insurance (ESI) | 15th of every next month |
| – | Labour Welfare Fund | Paid on annual basis as per the due date applicable in respective states |
| – | Filing of PF Return | 25th April subsequent to the financial year |
Conclusion
Section 8 companies must adhere to the list of compliance calendar for Section 8 Companies that are mentioned above. Failure to comply with the compliance standards could result in severe fines and the payment of additional penalties as time goes on. Therefore, non-compliance would not only result in severe consequences, such as the imposition of heavy fines and penalties but also damage the company’s reputation, which could impact its ability to conduct business.
Read our Article:Annual Compliance for Section 8 Company: A Complete Checklist
