Under the Companies Act, 2013, a Section 8 company is a type of NGO registered body. As par the Act, every Section 8 company needs to follow the compliance imposed by Income tax authorities and Registrar of Companies (RoC). If they fail to satisfy the requirements of compliance, it can cause heavy penalties up to Rs 1 lakh in a year. Furthermore, such companies and directors might be blacklisted for a certain time.
A Section 8 company is made with the purpose to promote arts, commerce, education, sports, social welfare, research and protection of environment of the country. They are authorized to do business and make profit which can be used for the objectives and members cannot be informed about that.
Appointment of Auditor within 30 Days
A Section 8 company should complete the appointment procedure of the first auditor within 30 days since when the same is incorporated. Thus, annual financial filings of the company can be performed accurately.
Organize Board of Directors' Meeting within 30 Days
The first Board of Directors' meeting is needed to be organized within 30 days since when the company is incorporated. Afterwards, the Board of Directors should conduct minimum one meeting within every six months.
Annual General Meeting
The first Annual General Meeting of a Section 8 company should be conducted within nine months from the close of company's first financial year.
Form ADT-1 -
Notice is to be given followed by appointment of Auditor within 15 days since when he is appointed.
Form DIR 2 –
Consent Form of 2 directors stating that they hold their office within 30 days since when the directors are appointed.
Form MR-1 –
It includes returns for appointment of Managing director who is the manager or chief managerial person within 60 days since when he is appointed.
Form AOC-3 -
Photocopy of audited financial statement is to be forwarded to the members of the company before 30 days from the date of the meeting.
Form MGT–15 –
A report on Annual General Meeting needs to be submitted within 30 days since when it is held.
Form AOC- 3 & 4 –
Photocopy of the financial statements, accepted in Annual General Meeting is to be submitted by a Section 8 company within 30 days of the meeting.
MoM or the minutes of the meeting should be recorded within 30 days since when the meeting is completed.
Form MGT-7 -
Annual returns must be filed by Section 8 companies within 60 days from the date of annual general meeting.
One Click Business Solutions Private Limited completes all the compliance needs of a Section 8 company through our powerful state-of-the-art technology. We have vibrant team to make all necessary paperwork to ensure smooth interaction between our clients and government. At our company, we have complete transparency on each procedure to fix realistic expectations. We have a team of highly experienced advisors to address any query about the tax and compliance procedure for Section 8 Company.
No need to have minimum paid up share capital and appointment of company secretary is not essential
No limit regarding maximum number of Directors
No necessity of Independent Director
Directorship in Section 8 Company is not considered for the maximum number of Directorship of a Director
No need to form Nomination & Remuneration Committee and Stakeholder Relationship Committee
Non-compliance may lead to a penalty with a fine of Rs.25,000 to Rs.5,00,000 and/or imprisonment.
A Section 8 company needs to pay corporate tax as recommended by the Income Tax Act. But, certain income can be claimed by it to be excluded while calculating the total income which is taxable to income tax. Following compliances must be filed for claiming an exemption:
Section 8 companies needs to be registered under Section 12A of Income Tax Act with the Principal Commissioner by using form 10A
It must follow the conditions mentioned under Section 11 to qualify for such exemption
The company is required to be approved under Section 80G through Form 10B
One Click Business Solutions Private Limited completes all the compliance needs of a Section 8 company through our expert team and powerful state-of-the-art technology. We have vibrant team to make all necessary paperwork to ensure smooth interaction between our clients and government. At our company, we have complete transparency on each procedure to fix realistic expectations. We have a team of highly experienced advisors to address any query about the tax and compliance procedure of Section 8 Company.
Yes, Section 8 Company must follow the rules prescribed by the Ministry of Corporate Affairs to perform the same.
Yes, by satisfying the conditions prescribed by the pertinent provisions under the Income Tax Act, it can claim complete exemption.
Section 8 Company can be registered as a company limited by shares or assure with or without share capital. Irrespective of the type of the company, dividends cannot be issued to its members by a Section 8 company.
It is punishable if auditor cannot be appointed and punishment includes a fine of Rs. 25,000 that may extend up to Rs. 5,00,000.
If Director's Consent Form is not filed then it is punishable with a fine up to Rs 50,000 or imprisonment up to six months.
If filing of annual returns is not done properly, then it is punishable with a fine of Rs 50,000 which may extend up to Rs 5 Lakh.
If a copy of audited financial statements are not sent to the members before the Annual General Meeting and also failure to record the minutes of the meeting then it is considered punishable with a fine up to Rs 25,000.
If Annual General Meeting is not organized then it is punished with a fine up to Rs 1 Lakh.
If report on Annual General Meeting is not submitted then it is punishable with a fine of Rs 1 Lakh that may increase to Rs 5 Lakh.
You need to incorporate your company with the Commissioner of Income tax to get tax exemption.
No. If a company is not incorporated with the Commissioner, the same will be imposed tax on par like other companies at 30%.
Yes. It is permitted to collect up to 15% of its total income without payment of tax.