Section 8 Company Annual Filing and Other Compliances
Section 8 Company Annual Filing refers to Annual Return of Section 8 Companies as per Companies Act 2013. Other related compliance for Section 8 Companies are statutory filing for TDS, GST, Income Tax and other filing as applicable as per the nature of Section 8 Company business.
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Comprehensive Guide on Section 8 Company Annual Return and Compliance in India
1. Introduction to Section 8 Companies
A Section 8 Company is a type of Non-Profit Organization (NPO) registered under the Companies Act, 2013 in India. The primary objective of a Section 8 Company is to promote commerce, art, science, education, research, sports, charity, social welfare, environmental protection, or other similar objectives. Unlike other companies, Section 8 Companies do not distribute profits among their members and must utilize the income for promoting their objectives.
To ensure smooth operations and legal compliance, a Section 8 Company must adhere to specific annual, monthly/quarterly, and event-based compliances as mandated by the Ministry of Corporate Affairs (MCA) and Income Tax Department.
2. Categories of Compliance for Section 8 Companies
The compliance requirements for a Section 8 Company are categorized into three major types:
- Annual Compliance – Yearly filings and disclosures irrespective of business activity.
- Monthly/Quarterly Compliance – Periodic filings required if the company has GST, TDS, PF, or ESI registrations.
- Event-Based Compliance – Compliance requirements triggered by specific corporate actions or changes in company structure.
3. Annual Compliance Requirements
3.1 RoC Filings (Registrar of Companies)
Form Name | Purpose | Details | Due Date |
AOC-4 | Financial Statement Filing | Includes Balance Sheet, Profit & Loss Account, and other financial disclosures | Within 30 days of the Annual General Meeting (AGM) |
AOC-4 XBRL | Financial Statement in XBRL Format | Mandatory for companies with a turnover exceeding INR 100 Crores or a paid-up capital of INR 5 Crore or more | Within 30 days of the AGM |
MGT-7 | Annual Return Filing | Covers board meetings, shareholding pattern, and governance details | Within 60 days of the AGM |
3.2 Income Tax Compliance
Form Name | Purpose | Details | Due Date |
ITR-5 | Income Tax Return Filing | Applicable for Section 8 Companies registered under Section 12A for tax exemption | 31st July if no tax audit is required |
ITR-5 | Income Tax Return Filing | If Tax Audit under Section 44AB is applicable | 30th September |
4. Monthly / Quarterly Compliance Requirements
4.1 GST Compliance (If Registered)
Form Name | Purpose | Details | Due Date |
GSTR-3B | GST Monthly Summary | Summary of GST on sales and purchases | 20th of every month |
GSTR-1 | GST Monthly Filing | Invoice-wise details of sales | 10th of every month |
GSTR-1 (Quarterly) | GST Quarterly Return | If opted for quarterly return | Before 30 days from the end of the quarter |
4.2 TDS Compliance (If Section 8 Company Deducts TDS)
Form Name | Purpose | Details | Due Date |
24Q / 26Q / 27Q | TDS Quarterly Returns | 24Q – TDS on Salaries, 26Q – TDS on Non-Salaried Payments, 27Q – TDS on Foreign Payments | Before 30 days from the end of each quarter |
4.3 PF and ESI Compliance (If Registered)
Form Name | Purpose | Details | Due Date |
PF & ESI Returns | Monthly Returns | Details of employer and employee contributions | Before 15th of every month |
5. Event-Based Compliance Requirements
Form Name | Purpose | Details | Due Date |
INC-12 | Grant of License | Required for obtaining a license under Section 8 | As per requirement |
INC-18 | Application for Conversion | Required for conversion of a Section 8 Company into another type | As per requirement |
INC-20 | Revocation/Surrender of License | Required for surrendering the Section 8 license | As per requirement |
DIR-3 KYC | KYC of Directors | Mandatory for all active directors | On or before 30th September every year |
MSME Form | Outstanding Payments to MSMEs | Half-yearly reporting of dues to MSME suppliers | As per requirement |
6. Importance of Compliance for Section 8 Companies
- Avoid Penalties: Non-compliance leads to penalties, legal issues, and potential dissolution.
- Maintain Credibility: Compliance enhances the organization’s trustworthiness with donors, government agencies, and stakeholders.
- Tax Benefits: Proper compliance ensures continued eligibility for tax exemptions under Section 12A & 80G.
- Operational Efficiency: Timely filing prevents unnecessary financial burdens and ensures smooth operations.
7. Case Study: Importance of Compliance in a Section 8 Company
Example: An NGO running a skill development center for underprivileged youth failed to file its MGT-7 and AOC-4 for two consecutive years. As a result:
- The company was marked as a defaulting company by MCA.
- A penalty of INR 1 lakh was imposed for non-compliance.
- It became ineligible for government grants and tax exemptions.
- The company had to pay additional legal fees to restore compliance.
This case highlights the necessity of timely compliance to avoid financial losses and operational disruptions.
8. Conclusion
Compliance is a crucial aspect of managing a Section 8 Company in India. By adhering to the required annual, monthly, and event-based filings, companies can operate efficiently, maintain tax benefits, and build credibility. It is advisable to consult with compliance experts or professionals to ensure all statutory requirements are met in a timely manner.
For end-to-end compliance solutions, ReturnFilings.com provides expert services to help you focus on your mission while we take care of your legal and regulatory needs.
By adhering to the above compliance requirements, Section 8 Company can operate smoothly, avoid penalties, and maintain good legal standing. For professional assistance, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091 to ensure all statutory obligations are met on time.
9. Additional Resources
For further reading, check out the following topics:
- How to Register a Section 8 Company in India?
- Registration / Incorporation process for Non-Government Organisation (NGO)
- How to Obtain 80G & 12A Registration for NGOs?
- Registration / Incorporation process for Non-Profit Organisation (NPO)
Frequently Asked Questions (FAQs) related to Section 8 Company Annual Filing and Compliance
General Section 8 Company Annual Filing Requirements
1. What are Section 8 Company Annual Filings?
Section 8 company annual filings are mandatory submissions to the Ministry of Corporate Affairs (MCA) that demonstrate a company’s financial health and operational status. Section 8 companies are non-profit organizations registered under the Companies Act, 2013, with the primary objective of promoting charitable or not-for-profit activities. These filings ensure legal compliance and transparency.
2. Why are Section 8 Company Annual Filings important?
Annual filings ensure transparency, provide stakeholders with essential financial data, and help avoid penalties. These filings also demonstrate the company’s continued compliance with legal requirements, building trust with donors, beneficiaries, and the public.
3. What are the key compliance requirements for Section 8 Companies?
o Form MGT-7 (Annual Return): Provides details of directors, members, and the company’s structure.
o Form AOC-4 (Financial Statements): Includes balance sheet, income, and expenditure statement.
o Proper Bookkeeping: Accurate records of financial transactions.
o Annual Audit: Mandatory audit by a Chartered Accountant.
o Income Tax Return (ITR): Annual submission, even if tax-exempt.
o Annual General Meeting (AGM): Discussion of performance and financial statements.
4. What is the penalty for non-compliance by Section 8 Companies?
Penalties include fines, legal action against directors, and potential revocation of Section 8 status. Late filing penalties are ₹100 per day per form.
Filing of Key Forms
5. What is the due date for filing Form MGT-7 (Annual Return)?
Form MGT-7 is due within 60 days of the AGM.
6. What happens if a Section 8 Company misses the deadline for Form MGT-7 filing?
Late filing attracts a penalty of ₹100 per day of delay.
7. When should Form AOC-4 (Financial Statements) be filed?
Form AOC-4 is due within 30 days of the AGM.
8. Who can digitally sign Form AOC-4?
Form AOC-4 must be digitally signed by the directors of the company.
9. What is the penalty for late filing of Form AOC-4?
The penalty is ₹100 per day of delay.
Tax Audit and Filing
10. Is a tax audit mandatory for all Section 8 Companies?
Yes, a Chartered Accountant must audit accounts annually.
11. What is the deadline for tax audit and tax filing?
o Tax audit deadline: September 30th of the following financial year.
o ITR filing deadline: July 31st (if no tax audit), October 31st (if tax audit required).
12. What is the Income Tax Return (ITR) form used by Section 8 Companies?
Typically, ITR-7 is used.
Annual General Meeting (AGM)
13. What is an AGM?
A yearly meeting to discuss performance, approve financials, and appoint auditors.
14. When should an AGM be held?
Within 15 months of the previous AGM or within 9 months from the end of the financial year, whichever is earlier.
15. What happens if a Section 8 Company fails to hold its AGM?
Legal penalties and potential action against directors.
FCRA Compliance (For Foreign Contributions)
16. What is FCRA registration and why is it important?
Mandatory for Section 8 companies receiving foreign contributions to ensure funds are used for intended purposes.
17. What are the key FCRA compliance requirements?
o Obtain FCRA registration or prior approval from the Ministry of Home Affairs (MHA).
o Maintain separate accounts for foreign funds.
o File annual returns detailing foreign fund receipts and usage.
18. What happens if foreign contributions are received without FCRA registration?
This is a serious violation and can result in penalties, fines, or deregistration.
Fundraising and Donations
19. How can a Section 8 company raise funds?
o Donations
o Grants
o CSR funding
o Membership fees
20. Are there restrictions on fund usage?
Yes, funds must be used only for charitable objectives and not for personal gain.
21. Can a Section 8 company pay salaries?
Yes, reasonable salaries can be paid to employees.
Operational Considerations
22. Can a Section 8 company own property?
Yes, both movable and immovable properties can be owned.
23. Can a Section 8 company enter into contracts?
Yes, for necessary business operations.
24. What happens to assets if a Section 8 company is wound up?
Assets must be transferred to another Section 8 company or similar organization.
Differences Between Section 8 Company, Trust, and Society
25. What are the key differences between a Section 8 company, a trust, and a society?
o Legal Structure: Section 8 company is governed by the Companies Act, while trusts and societies follow state laws.
o Governance: Section 8 companies have a formal governance structure with directors and members.
o Compliance: Section 8 companies have stricter compliance and reporting requirements with the MCA.
Other generally asked questions related to Section 8 Companies annual filing and compliance
26. How do I register a Section 8 company in India?
The process involves drafting the MoA and AoA, obtaining approvals, and registering with the MCA.
27. What are the tax benefits available to Section 8 companies?
Section 8 companies can avail of tax exemptions under Section 80G of the Income Tax Act.
28. Can a Section 8 company engage in commercial activities?
Limited commercial activity is permissible if profits are used for charitable purposes.
29. How do I change the name of a Section 8 company?
A special resolution and MCA approval are required.
30. What is the process for amending the Memorandum of Association?
Requires a special resolution and MCA approval.
31. How many directors are required for a Section 8 company?
Minimum of three directors.
32. Can a Section 8 company receive foreign funding?
Yes, but FCRA registration or prior permission is mandatory.
33. What are the reporting requirements for foreign contributions?
Annual filings with the Ministry of Home Affairs.
34. How can I donate to a Section 8 company and claim tax benefits?
Donations to eligible companies qualify for deductions under Section 80G.
35. Where can I find a list of registered Section 8 companies in India?
The MCA website provides a searchable database of registered companies.