ANNUAL COMPLIANCES FOR SECTION 8 COMPANIES

Under the Companies Act, 2013, a Section 8 company is categorized as a registered non-governmental organization (NGO). According to the Act, every Section 8 company must adhere to the compliance requirements set forth by the Income Tax authorities and the Registrar of Companies (RoC). Failure to meet these compliance obligations can result in substantial penalties, reaching up to Rs 1 lakh per year. Additionally, both the companies and their directors may face temporary blacklisting.

SECTION 8 COMPANY

A Section 8 company is established with the aim of promoting arts, commerce, education, sports, social welfare, research, and environmental protection in the country. While these companies are permitted to conduct business and generate profits, such earnings must be reinvested in furthering their objectives, and members are not entitled to receive any share of the profits.

 

INSTANT COMPLIANCE AFTER INCORPORATION

Appointment of Auditor within 30 Days

A Section 8 company must complete the appointment of its first auditor within 30 days of incorporation. This ensures that the company can accurately carry out its annual financial filings.

Organize Board of Directors’ Meeting within 30 Days

The first meeting of the Board of Directors must be held within 30 days of the company’s incorporation. Subsequently, the Board is required to conduct at least one meeting every six months.

Annual General Meeting

The inaugural Annual General Meeting (AGM) of a Section 8 company must take place within nine months following the conclusion of its first financial year.

PROCESS OF COMPLIANCES OF SECTION 8 COMPLIANCES

Form ADT-1

A notice must be submitted within 15 days following the appointment of the auditor.

Form DIR-2

This is the consent form for two directors, confirming that they accept their positions within 30 days of their appointment.

Form MR-1

This form includes the returns for the appointment of a managing director, who serves as the manager or chief managerial personnel, and must be filed within 60 days of their appointment.

REPORTS OF ANNUAL GENERAL MEETINGS

Form AOC-3

A photocopy of the audited financial statements must be sent to the company’s members at least 30 days before the meeting.

Form MGT–15

A report on the Annual General Meeting (AGM) must be submitted within 30 days of the meeting.

Forms AOC-3 & AOC-4

The audited financial statements approved at the AGM should be submitted by the Section 8 company within 30 days of the meeting. Additionally, the minutes of the meeting must be recorded within 30 days after its conclusion.

Form MGT-7

Section 8 companies are required to file their annual returns within 60 days from the date of the Annual General Meeting.

At One Click Business Solutions Private Limited, we handle all compliance requirements for Section 8 companies using our advanced technology. Our dynamic team efficiently manages the necessary paperwork, ensuring seamless communication between our clients and government authorities. We prioritize transparency in every procedure to set realistic expectations. Our highly experienced advisors are available to answer any questions regarding the tax and compliance processes for Section 8 companies.

Exemptions under Section 8 companies

  • No Minimum Paid-Up Share Capital Required: There is no requirement for a minimum paid-up share capital, and appointing a company secretary is not mandatory.

  • Unlimited Directors: There is no cap on the maximum number of directors a Section 8 company can have.

  • No Requirement for Independent Directors: The appointment of independent directors is not necessary.

  • Directorship Exemption: Directorship in a Section 8 company does not count toward the maximum number of directorships a director can hold.

  • No Need for Committees: There is no requirement to establish a Nomination & Remuneration Committee or a Stakeholder Relationship Committee.

Tax compliance

A Section 8 company is subject to corporate tax as per the Income Tax Act. However, certain types of income may be excluded when calculating taxable income. To claim these exemptions, the following compliance steps must be followed:

  • Registration Requirement: The Section 8 company must register under Section 12A of the Income Tax Act with the Principal Commissioner by submitting Form 10A.

  • Compliance with Conditions: The company must meet the conditions outlined in Section 11 to qualify for the exemption.

  • Approval Under Section 80G: The company needs to obtain approval under Section 80G by filing Form 10B.

At One Click Business Solutions Private Limited, we handle all compliance needs for Section 8 companies through our expert team and advanced technology. Our dedicated team ensures all necessary paperwork is completed to facilitate smooth interactions between our clients and government authorities. We prioritize transparency in every procedure to set realistic expectations. Additionally, our experienced advisors are available to answer any questions regarding tax and compliance procedures for Section 8 companies.