Overview of Section 8 Company Compliance
The Companies Act, 2013 has made it mandatory for all the Section 8 Company Companies to adhere to Section 8 Compliance with the MCA (Ministry of Corporate Affairs).
The purpose of forming Section 8 Company is to promote, encourage, and nourish activities related to art, science, sports, commerce, charitable activities, etc. Section 8 Company can be categorized as a Non-Governmental Organization. These companies enjoy the liberty of being treated as ‘Limited Company’, though, word ‘Limited’ is not added at the end of their names. Concisely, Section 8 companies work in the direction of promoting needy communities and sectors in India. These Companies are not liable to give income or dividend to its members.
Benefits of Section 8 Company Compliance
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Documents Required for Annual Compliances of Section 8 Company
List of mandatory Section 8 company compliances
- Appointment of Auditor
It is compulsory for a Section 8 company to appoint an auditor to take care of their financial recordings every year.
- Maintaining Registers
Maintaining statutory records in registers is expected from Section 8 companies. These registers are maintained on a year basis and the purpose of these registers is to check how the company has performed annually. Information related to members, loans, charges and investment is provided in the register.
- Maintenance of Financial Statements
Financial records of a Section 8 Company are maintained on an annual basis. Once the financial records are prepared they are presented in the front of the registrar. Financial records consist of the following information:
1. Trading Account
2. Profit and Loss Account
- Preparing Director’s Report
Section 134 of the Companies Act, 2013 says that Form AOC-4 is needed to file the Director’s Report. The purpose of preparing a Director’s Report is to give shareholders a preview of the financial position of the company and the scope of its business. The signed ‘minutes of meetings’ is required to be maintained at the Registered Office.
- Income Tax Return Filing
Section 8 company are required to file for Income Tax Returns on or before 30th September of the next fiscal year. In order to give complete overview of the company’s income it is essential to file for Income Tax return. But if the company is registered under Section 12A and 80G it can avail the benefit of tax exemption.
- Conduct Board Meeting
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.
- Conduct Annual General Meeting
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 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.
- Filing of Financial Return with RoC
E-form AOC-4 is used to file the copy of financial statements. It is filed within 30 days from the date on which the annual general meeting is held.
- Filing of Annual Return with RoC
Form MGT-7 is used to file the annual return of the company. Annual return is filed within 60 days from the conclusion of the Annual General Meeting. Where at whatever year no Annual General Meeting is held, the yearly return ought to be recorded inside sixty days from the days on which the yearly General Meeting ought to have been held that is 30 September. It ought to be connected with the announcement referencing the explanations behind not holding the Annual General Meeting.
Event-based Annual Compliances of Section 8 Company
Event based, as the name recommends, are the compliances should be documented on the event of explicit occasions. In contrast to annual compliances, these are non-periodical in nature.
Checklist for Event-based compliances for Section 8 Company:
Tax Compliance for Section 8 Companies
Section Company is bound to pay corporate tax as mentioned in the Income Tax Act. But by adopting certain measures the Company can exempt its certain income from the income tax. To entertain such exemptions Section 8 Company needs to fulfil the following compliances:
Penalties to be charged in case of Non-Compliance
The Ministry of Corporate Affairs has the authority to impose certain penalties in case it encounters any non-compliance with the procedures.
Penalties to be imposed are as follows:
Due Dates for filling Section 8 Company Compliances
Non-compliance can lead to penalty and for the Section 8 Company the best way to ignore penalty is quite smooth, all the company has to do is follow the compliances within the stipulated period of time.
AGM (Annual General Meeting)
Within 30 days of AGM
Within 60 days of AGM
Income Tax Return
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Frequently Asked Questions
No, there is a particular exemption to Section 8 and One Person Company from conforming to the Secretarial Standards. In any case, Companies must hold fast to Secretarial norms so as to raise the corporate governance standards.
Tax Benefits: Section 8 Company is a non-benefit association that is the reason they are excluded from certain arrangements of the personal expense. They are additionally given various different conclusions and other tax reductions. One of such exclusion is under Section 80G of the Income Tax Act, 1961, whereby contributors to non-benefit associations may guarantee a half discount against gifts made. The registration done under Section 80G will be legitimate for regularly a time of one-three years.
- Inability to send a copy of audited fiscal reports to the individuals before the Annual General Meeting, and record the minutes of the meetings are each punishable with a fine up to rupees 25,000/ -
- Inability to lead an Annual General Meeting is punishable with a fine up to Rupees one lakh.
- Inability to present a report on Annual General Meeting is punishable with a fine of Rupees one Lakh which may reach out to Rupees five Lakh.