Compliances of Section 8 Company 6

The goal of founding a Section 8 Company is to promote, stimulate, and nourish activities in the fields of art, science, sports, business, and charity, among others. Section 8 Companies can be classified as Non-Governmental Organizations. These firms have the option of being classified as a 'Limited Company'; however, the word 'Limited' is not added to the end of their names. Simply put, Section 8 firms seek to promote underserved areas and industries in India. These companies are not required to pay income or dividends to their members. Easypaytax ensures your compliance with these mandates.

List of mandatory Section 8 company compliances

Appointment Of Auditor:
A Section 8 company must appoint an auditor to oversee its financial recordings every year.
Maintaining Registers:
Maintaining statutory records in registers is expected from Section 8 companies. These registers are maintained every year, and their purpose is to check how the company has performed annually. Information related to members, loans, charges, and investment is provided on the register.
Maintenance Of Financial Statements:
Financial records of a Section 8 Company are maintained on an annual basis. Once prepared, they are presented to the registrar. Financial records consist of the following information:
- Trading Account
- Profit and Loss Account
- Balance Sheet
Preparing Director’s Report:
Section 134 of the Companies Act, 2013, mandates 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 are required to be maintained at the Registered Office.
Income Tax Return Filing:
Section 8 companies are required to file Income Tax Returns on or before 30th September of the next fiscal year. To provide a complete overview of the company’s income, it is essential to file for Income Tax return. However, if the company is registered under Section 12A and 80G, it can avail itself of the benefit of tax exemption.

Conduct Board Meeting:

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

Conduct Annual General Meeting:

The Annual General Meeting of the Section 8 Company should be held yearly on or before 30th September. It is necessary for all directors, members, and auditors to attend the meeting. They should be notified regarding the meeting by giving not less than 21 days’ notice. Form MGT-15 is used to submit the report of the 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. The annual return is filed within 60 days of the conclusion of the Annual General Meeting. Where no Annual General Meeting is held each year, the yearly return ought to be recorded within sixty days from the day on which the Annual General Meeting should have been held, that is, September 30. It ought to be appended with a statement mentioning the explanations for 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:
1. Transfer of shares
2. Appointment/Resignation of Directors
3. Appointment/Resignation of Auditors
4. Modification in company’s name
5. Modification in the company’s MOA
6. Appointment of Key Managerial Personnel
7. Receipt of share application money
8. Any alteration in the company’s structure

Tax Compliance for Section 8 Companies

The company is bound to pay corporate tax as mentioned in the Income Tax Act. However, by adopting certain measures, the company can exempt certain incomes from income tax. To entertain such exemptions, Section 8 Company needs to fulfill the following compliances:

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 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 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:

The Central Government may disavow the license granted to the organization if it finds that the organization is operating fraudulently or in a manner violative of the object of the organization.
The organizations will be punishable with fines, which will not be under ten lakh rupees and can be extended to one crore rupees.
The directors and every official of the organization who is in default will be punishable with imprisonment for a term which may extend to twenty-five lakh rupees or with both.
In the event that it is found that the affairs of the organization were conducted fraudulently, every official in default will be liable for action under Section 447.

COMPLIANCE	DUE DATE
AGM (Annual General Meeting)	30thSeptember
AOC-4	Within 30 days of the AGM
MGT-7	Within 60 days of the AGM
Income Tax Return	30th September

Note: The aforementioned Fees is exclusive of GST.

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Compliances of Section 8 Company 6