A Section 8 Company is a non-profit organization registered under the Companies Act, 2013 with objectives related to charity, social welfare, education, research, or environmental causes. While Section 8 Companies enjoy tax benefits and other privileges, they must adhere to strict annual compliance and audit requirements to maintain their legal status and tax exemptions.

Failure to comply can lead to penalties, cancellation of tax benefits, and even dissolution of the company. This guide outlines the mandatory compliance and audit obligations for Section 8 Companies.

1. Key Annual Compliance Requirements for Section 8 Companies

A. Filing of Financial Statements (AOC-4)

• A Section 8 company must prepare and file its financial statements annually with the Ministry of Corporate Affairs (MCA).
• Form AOC-4 (Financial Statement) must be filed within 30 days of the AGM (Annual General Meeting).
• The financial statements must include the balance sheet, profit and loss account, and cash flow statement.

B. Filing of Annual Return (MGT-7)

• The annual return (MGT-7) provides details of the company’s governance, members, and compliance status.
• It must be filed with the Registrar of Companies (ROC) within 60 days of the AGM.

C. Conducting Annual General Meeting (AGM)

• Every Section 8 company must hold an AGM within six months of the financial year-end (before September 30).
• The AGM discusses financial performance, compliance, and future plans.

D. Income Tax Filing (ITR-7)

• Section 8 Companies must file ITR-7 under the Income Tax Act, 1961, reporting their annual income, expenses, and tax exemptions.
• The due date for income tax return filing is July 31 (for non-audited companies) and October 31 (for audited companies).

E. Tax Exemption Compliance (80G & 12A)

• Companies registered under Section 12A (Income Tax Act) must renew their tax exemption certificates as per government regulations.
• Section 8 companies offering 80G tax benefits to donors must ensure timely renewals and compliance with reporting norms.

F. Directors’ Report Preparation

• Section 8 Companies must prepare and submit a Directors’ Report detailing:
  • Financial health of the company
  • Compliance status
  • CSR activities and projects undertaken
  • Future goals and planned activities
• The report must be approved by the Board of Directors before submission.

G. CSR Reporting (If Applicable)

• If the company receives CSR funds from corporations, it must submit a detailed CSR report explaining how the funds were utilized.
• This ensures compliance with CSR laws under the Companies Act, 2013.

2. Audit Requirements for Section 8 Companies

A. Statutory Audit

• Mandatory for all Section 8 Companies, regardless of turnover or income.
• Conducted by a Chartered Accountant (CA) to verify the company’s financial health, accuracy of financial statements, and legal compliance.

B. Internal Audit

• Applicable to larger Section 8 Companies with substantial donations, grants, or turnover.
• Helps in ensuring financial integrity, fraud prevention, and transparency.

C. Tax Audit (If Turnover Exceeds ₹1 Crore)

• Section 8 Companies with annual receipts of over ₹1 crore must undergo a tax audit under Section 44AB of the Income Tax Act.

D. GST Audit (If Turnover Exceeds ₹5 Crore)

• If the company is registered under GST and has a turnover above ₹5 crore, a GST audit is mandatory.

3. Penalties for Non-Compliance

Non-compliance can lead to:
🚨 Penalties up to ₹1 lakh for failure to file financial statements (AOC-4).
🚨 Fines up to ₹50,000 for late annual return filing (MGT-7).
🚨 Loss of tax exemptions under Sections 12A and 80G.
🚨 Legal actions and possible revocation of Section 8 Company status.

4. How ASK ASSOCIATES Ensures Compliance for Section 8 Companies

Managing compliance for Section 8 Companies can be complex and time-consuming. ASK ASSOCIATES simplifies this process by offering:

✅ Annual ROC Filings (AOC-4, MGT-7) with Zero Errors
✅ Tax Filings & Audit Management (ITR-7, GST, & Tax Audits)
✅ 80G & 12A Registration and Renewals
✅ Dedicated Compliance Monitoring to Avoid Penalties

📞 Let ASK ASSOCIATES handle your Section 8 Company compliance effortlessly! Contact us today.