The Companies Act of 2013 mandates that each and every Section 8 company submit a Section 8 Compliance Report to the Ministry of Corporate Affairs. One of the main reasons Section 8 Company was established is to support, advance, and encourage activities in the fields of science, art, sports, charity, business, and other areas.
Section 8 Compliance Audit of the Business:
The financial records of a section 8 company must be audited annually.
Conducting Board Meetings: A Section 8 company must appoint an auditor to annually review and maintain its financial records and statements. The board of directors of a company should meet twice a year, separated by a maximum of three months or ninety days.
Income Tax Return (ITR) filing: Section 8 businesses must submit their IT returns by September 30 of the previous fiscal year. The corporation is required to submit an income tax return in order to provide comprehensive information about its earnings. The company may be eligible for tax exemption if it is registered under Sections 12A and 80G.
Submitting a Financial Return to the ROC: Use the E-form AOC-4 to send copies of financial statements and reports.
Annual General Meeting (AGM) – This company’s annual general meeting must take place by September 30 or earlier each year. It must be filed within a month or thirty days of the date the meeting is held. The meeting must be attended by all members, directors, shareholders, and auditors. A formal notification must be sent to all parties involved within 21 days of the meeting. Within one month or thirty days of the conclusion of the Annual General Meeting, the report must be submitted on Form MGT-15. Annual
Return Filing with ROC: A section 8 company’s annual return must be submitted on Form MGT-7. The annual return must be submitted within 60 days of the annual general meeting. The annual return must be submitted within sixty days of the day or days on which the annual general meeting ought to have taken place—September 30—if there isn’t one held during the year.
Compliance with Section 8 Company Income Tax The Income Tax Act mandates that Section 8 companies pay corporate tax. However, by incorporating a few measures, the Section 8 Company can maintain its exemption from income tax.
Section 8 Company must comply with the following in order to take advantage of these exemptions:
Section 8 companies are required to use form 10A to register with the Principal Commissioner under Section 12A of the Income Tax Act. If the company wants to meet the requirements for exemption eligibility, it must follow the rules outlined in Section 11. Documentation Required to Comply Annually An audit for a Section 8 company must submit the following documents annually:
The Benefits of Section 8 Compliance for Businesses Eliminate Penalties: Memorandum of Association (MOA), Article of Association (AOA), Certificate of Incorporation, Digital Signature Certificate (DSC). The company runs the risk of paying fines and penalties if compliances are not filed.
Building Trust: A company is regarded as trustworthy by customers, suppliers, and vendors if it timely files compliance reports and discloses financial information.
Operations Transparency: Compliance submissions reveal the current state of business operations. Financial returns and other compliance documents can provide details about the company’s financial situation.
Avoid legal trouble: If compliances are not filed, the Ministry of Corporate Affairs may issue a notice, among other legal consequences. Compliance must be filed on time to avoid legal problems. Credibility: A business will have an easier time obtaining financial assistance and market credit if the compliances are filed on time than if they are not.
The Ministry of Corporate Affairs has the authority to impose a variety of fines in the event that any compliance is not adhered to. Penalties that will be assessed in the event of noncompliance The following penalties will be handed down:
Companies will be subject to a fine that cannot be less than 10 lakhs and may not exceed 1 crore. The Central Government may terminate the company’s authorization in the unlikely event that it learns the organization is acting dishonestly or against its stated objectives. Companies with Section 8 status are those with no profit as their primary objective. Their sole objective is charity. There is no minimum share capital: Under the Companies Act Government Authorization, Section 8 companies must have a minimum paid-up share capital: The Central Government must approve the establishment of these businesses. Members of Section 8 companies are only liable for a predetermined amount of money, so there is no such thing as unlimited liability. The Central Government may revoke this license at any time as it deems necessary.
In conclusion, annual compliances are those that must be reported on a regular basis. The company must disclose these because they are recurring in nature and represent a liability. To manage the company’s books of accounts, every Section 8 company must employ an auditor. An auditor must be appointed by every Section 8 business. – A section 8 business is required to audit its financial records annually.