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Section 8 Company Compliance

A Section 8 company, the company form of an NGO, must meet the same core compliances as any company under the Companies Act, 2013, plus the obligations that come with its charitable status and tax registrations. This means an AGM, a statutory audit, AOC-4 and MGT-7, and, where it holds 12A and 80G, the income tax filings for charitable entities. Samkhya manages your Section 8 company’s full compliance.

Section 8 Company Compliance: A Detailed Guide

A Section 8 company is a non-profit incorporated under the Companies Act, 2013 to promote charitable objects, and it carries the same core annual compliances as any company: an Annual General Meeting by 30 September, a statutory audit, AOC-4 (financial statements) within 30 days of the AGM, MGT-7 (annual return) within 60 days, ADT-1 for the auditor, and DIR-3 KYC for directors. On top of this, because it is a charitable entity, a Section 8 company that holds 12A and 80G registration must file the income tax return for charitable institutions (ITR-7), apply at least 85% of its income to its objects, and, where it receives corporate funds or foreign contributions, comply with CSR and FCRA requirements. Late ROC filing attracts Rs. 100 per day per form with no cap.

Why Compliance Matters

Compliance protects a Section 8 company in several ways:

  • Protects the Licence: Good compliance protects the Section 8 licence granted by the ROC.
  • Keeps Exemptions Safe: It preserves the 12A and 80G tax benefits the entity relies on.
  • Enables Funding: Clean records are essential for grants, CSR funds, and donor trust.
  • Avoids Penalties: It avoids the Rs. 100-per-day ROC late fees and tax penalties.
  • Prevents Disqualification: It protects directors from disqualification for default.
  • Builds Credibility: Transparency reassures donors, funders, and regulators.

The Core Filings

A Section 8 company’s filings are:

  • AGM: Held within six months of the year end, by 30 September.
  • AOC-4 (Financial Statements): Filed within 30 days of the AGM.
  • MGT-7 (Annual Return): Filed within 60 days of the AGM.
  • ADT-1 (Auditor): Filed within 15 days of the AGM.
  • ITR-7: The income tax return for charitable entities, where 12A applies.
  • 85% Application: At least 85% of income applied to charitable objects.

Company and Charitable Filings

A Section 8 company’s filings combine company and charitable obligations:

  • AOC-4: Financial statements, within 30 days of the AGM.
  • MGT-7: Annual return, within 60 days of the AGM.
  • ADT-1 and DIR-3 KYC: Auditor appointment and director KYC.
  • ITR-7: Filed annually where the entity holds 12A registration.
  • 12A and 80G: Maintained and renewed under the income tax framework.
  • CSR-1 and FCRA: Where the entity receives CSR funds or foreign contributions.

Who Must Comply

Section 8 compliance applies to:

  • Every company licensed under Section 8 of the Companies Act, 2013.
  • Section 8 companies with no surplus or limited activity, which must still file.
  • Entities holding 12A and 80G registration, which file ITR-7.
  • Those receiving CSR funds, which need CSR-1 and related compliance.
  • Those receiving foreign contributions, which need FCRA compliance.

The ROC, Income Tax, and the Process

A Section 8 company files with the Registrar of Companies on the MCA V3 portal and with the Income Tax Department on the e-filing portal. It completes its statutory audit, holds its AGM by 30 September, and files AOC-4 and MGT-7 with the ROC, along with ADT-1, while the directors complete DIR-3 KYC. As a charitable entity, it files ITR-7 and ensures it applies at least 85% of its income to its objects, maintaining its 12A and 80G registrations under the income tax framework. Where it receives corporate or foreign funds, it additionally meets CSR and FCRA obligations. Late ROC filing carries the Rs. 100-per-day penalty, so timely filing matters.

Documents Required

For the ROC Filings:

  • The audited financial statements, the board’s report and auditor’s report, and details of directors and members.

For the Tax Filings:

  • The income computation showing the 85% application of income, and the 12A and 80G details.
  • The NGO Darpan details and the FCRA or CSR records where applicable, with the directors’ Digital Signature Certificates.

Compliance Process

Section 8 compliance follows a clear sequence:

  1. Maintain books of account and complete the statutory audit.
  2. Hold the Annual General Meeting by 30 September.
  3. File ADT-1, AOC-4, and MGT-7 with the ROC.
  4. File the income tax return in ITR-7 where 12A applies.
  5. Ensure at least 85% of income is applied to the objects.
  6. Complete DIR-3 KYC for the directors.
  7. Meet CSR and FCRA obligations where relevant.

Stay Compliant with Samkhya

Keeping your Section 8 company compliant with Samkhya Corporate Services is simple. Just follow these easy steps:

  • Tell us about your Section 8 company: Share its objects and registrations.
  • We map company and tax filings: We prepare a combined compliance calendar.
  • Fill the form: Complete our online form and provide your records.

From there, our team handles the audit, ROC forms, and ITR-7.

Ongoing and Event-Based Compliance

Ongoing obligations include:

  • Maintain Registrations: Keep 12A, 80G, and NGO Darpan current.
  • Director Changes: File DIR-12 within 30 days of a change in directors.
  • Apply 85%: Apply at least 85% of income each year to the objects.
  • Report Donations: File the donation statement for 80G donors.
  • FCRA Returns: File annual FCRA returns where foreign funds are received.
  • No Profit Distribution: Apply all income and property to the objects, not to members.

Penalties and Charitable Compliance

Late filing of AOC-4 or MGT-7 attracts Rs. 100 per day per form with no cap, and three years of default disqualifies the directors, as for any company. Because a Section 8 company is a charitable entity, its tax position depends on maintaining 12A registration, filing ITR-7, and applying at least 85% of its income to its objects; failing these can make the income taxable. Its 80G approval lets donors claim a deduction and must be renewed on its cycle. A Section 8 company enjoys certain procedural exemptions under the Companies Act but is not exempt from the core filings or the audit. Where it receives CSR funds it files CSR-1, and where it receives foreign contributions it must comply with the FCRA, including annual returns.

Section 8 Annual Filings and Due Dates

Filing Purpose Due Date
AOC-4 Financial statements. Approx. 29 October.
MGT-7 Annual return. Approx. 28 November.
ADT-1 Auditor appointment. 15 days after AGM.
ITR-7 Charitable income return. As notified.
85% Rule Income applied to objects. Each year.
Late Fee Per ROC form, no cap. Rs. 100 per day.

Frequently Asked Questions

What compliances does a Section 8 company have?

It has the same core company compliances, AGM, statutory audit, AOC-4, and MGT-7, plus charitable filings such as ITR-7 and the 85% application of income where it holds 12A.

Is a Section 8 company exempt from ROC filing?

No. A Section 8 company gets some procedural exemptions but must still file AOC-4, MGT-7, and ADT-1 and have its accounts audited every year.

What is the penalty for late filing?

Late filing of AOC-4 or MGT-7 attracts Rs. 100 per day per form with no upper cap, and three years of default disqualifies the directors.

Does a Section 8 company file an income tax return?

Yes. Where it holds 12A registration, it files ITR-7 and must apply at least 85% of its income to its charitable objects.

What if it receives CSR or foreign funds?

It must file CSR-1 to receive CSR funds and comply with the FCRA, including annual returns, where it receives foreign contributions.

Must it maintain its 12A and 80G?

Yes. Maintaining and renewing 12A and 80G is essential to keep the tax exemption and the donor deduction, alongside the NGO Darpan registration.