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A Section 8 Company is a non-profit organization incorporated under the Companies Act, 2013, in India. These companies are established to promote charitable objectives such as education, arts, science, social welfare, and environmental protection. Unlike other corporate entities, a Section 8 company does not distribute profits to its members and instead reinvests its earnings to further its objectives.
Section 8 companies are subject to tax regulations under the Income Tax Act but can avail of certain tax exemptions by adhering to specific procedures:
Section 8 companies must register using Form 10A under Section 12A of the Income Tax Act to qualify for tax exemptions.
To avail of tax exemptions, Section 8 companies must meet the conditions outlined in Section 11, which primarily involve utilizing income solely for charitable, religious, or educational purposes.
For donors to claim tax benefits under Section 80G, Section 8 companies should obtain approval by submitting Form 10B.
These compliances are triggered by specific events such as changes in directors, auditors, share transfers, or modifications to the Memorandum of Association (MoA).
Mandatory filings and reporting that must be done annually or periodically, such as annual returns and financial statement filings.
Regulatory compliance based on particular operational changes, including restructuring and major financial transactions.
Process: File Form ADT-1 within 15 days of appointment.
Penalty: INR 300 per day for late filing.
Process: Maintain registers of members, directors, and financial transactions.
Penalty: INR 25,000 – INR 1,00,000 for non-compliance.
Process: Hold at least one Annual General Meeting (AGM) and four Board Meetings yearly.
Penalty: INR 50,000 for failure to conduct AGMs.
Process: Prepare and submit the Board’s Report with financials.
Penalty: INR 50,000 – INR 5,00,000 for non-compliance.
Process: Ensure accurate financial statements as per accounting standards.
Penalty: INR 1,00,000 for incorrect statements.
Process: File AOC-4 within 30 days of the AGM.
Penalty: INR 200 per day for late filing.
Process: Submit MGT-7 within 60 days of the AGM.
Penalty: INR 200 per day for late filing.
Process: File tax returns by September 30 of the following financial year.
Penalty: INR 10,000 for late filing.
| Compliance Type | Form/Requirement | Timeline | Penalty for Non-Compliance |
|---|---|---|---|
| Auditor Appointment | ADT-1 | 15 days from appointment | INR 300 per day |
| Financial Statements | AOC-4 | 30 days from AGM | INR 200 per day |
| Annual Return Filing | MGT-7 | 60 days from AGM | INR 200 per day |
| IT Return Filing | ITR-6 | By September 30 | INR 10,000 |
| Conducting AGM | Meeting Minutes | Yearly | INR 50,000 |
| Detailed Provision | Statutory Timeline | Required Form | Reporting Authority |
|---|---|---|---|
| Declaration of commencement of business | Within 180 Days from the incorporation date | INC-20A | ROC |
| Intimation of declaration received under Section 89 | Within 30 days of declaration receipt | MGT-6 | ROC |
| Intimation of declaration received under Section 90 | Within 30 days of declaration receipt | BEN-2 | ROC |
| Directors’ KYC by every Individual who holds a DIN | Within 6 months from the financial year-end | DIR – 3 KYC | ROC |
| Intimation regarding the appointment of Statutory Auditor | Within 15 days of the auditor's appointment | ADT-1 | ROC |
| Notice to the Registrar for appointment of First Statutory Auditor | Appoint within 30 days from the incorporation date | ADT-1 | ROC |
| Intimation regarding the resignation of the Statutory Auditor | Within 30 days of the auditor's resignation | ADT-3 | ROC |
| Filing of Resolution and agreements as specified in Section 117 (3) | Within 30 days of resolution/agreement | MGT-14 | ROC |
| Intimation of Change in the Registered Office | Within 30 days of a change in the registered office | INC-22 | ROC |
| Return in respect of outstanding payments to Micro or Small Enterprise | Within 1 month from the conclusion of each half-year | E-Form MSME-1 | ROC |
| Filing of annual return | Within 60 days from the conclusion of the AGM | E-Form MGT-7 | ROC |
| Disclosure of Interest by Director | In the First Board Meeting of the Financial Year AND when there is a change | MBP-1 | NA |
Conclusion
Compliance with tax regulations and legal requirements is crucial for Section 8 companies to maintain their non-profit status and avail of tax benefits. Failure to comply with statutory obligations can lead to severe penalties. By following the outlined checklist and ensuring timely filings, Section 8 companies can operate smoothly and fulfill their social objectives without legal hindrances. Consulting professionals like One Call Tax can help ensure full compliance with all applicable laws.
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