As provided for in the Companies Act of 2013, every company registered under the Companies Act 2013 or previous rules whether a private limited company, public limited company, small company, OPC, and category 8 company are required to file annual returns and annual tax returns whether they worked or not. Section 8 companies are also required to complete their annual financial statements and refunds and will also hold an annual general meeting and comply with all the provisions of the Companies Act 2013 and the provisions of the Income Tax Act 1961. This article talks about the annual compliance for Section 8 companies in Jaipur.
Section 8 Companies are a company incorporated under the Companies Act to promote trade, science, arts, sports, research, education, education, social welfare, environmental protection, etc. The Section 8 Company is registered as a Non-Profit Organization and falls under a Non-Governmental Organization. Section 8 companies perform all business functions and earn a profit but that amount of profit is used by that organization to achieve the purposes of the company and that profit, together with the profits, is not shared between the members of the company. These companies are considered limited companies but we do not use the name Limited at the end of its name.
Section 8 company incorporation requirements
At least two Directors needed
Minimum of two members or shareholders required
PAN, Aadhar Card, and the latest copy of the bank statement for all directors and members
Proposed work to be done
Proposed income account and expenses account for three years (Receipts)
Electricity bill, lease agreement/NOC of the company registered office address.
Section 8 Company incorporation process
Application for obtaining a digital signature for proposed directors
Application for a director ID (DIN) number
Name authorization application from the Registrar of companies
Application for a Section 8 Company license
Application for incorporation to the Registrar.
Annual Compliance for Section 8 Companies in Jaipur
Appointment of Auditor (Completion Form ADT-1) – As per section 139 of the Companies Act 2013, every company is compelled to appoint an auditor. The appointment of an auditor is mandatory because the auditor will audit the books of account and the company’s annual return and disclose his or her independent opinions. The first auditor of a category 8 company is appointed within 30 days from the date of its establishment. The Auditor-General is appointed by the company for 5 years and in such appointments, it is necessary to submit Form ADT-1.
Annual General Meeting: The annual general meeting is required to be held within 6 months from the end of the financial year.
Income Tax Returns: The Company’s Income Tax Returns are required to be submitted annually at the end of each audit year, on or before September 30th.
Maintenance of Official Registers: Category 8 companies are also required to maintain all official registers required to be maintained in terms of section 8 of the Companies Act of 2013 such as the register of members, income register, register of directors, etc.
Board Report: Under the provisions of the Companies Act 2013, the Board of Directors of a company is required to submit a report of their board properly, together with financial statements and other appendices. The company will submit a board report Form AOC-4.
Board Meeting: Under the provisions of the Companies Act 2013, a company shall hold board meetings twice a year in small companies and the time gap between 2 board meetings should not exceed 90 days.
Adjustment of Company Financial Statement: Under the provisions of the Companies Act 2013, a company shall prepare its financial statements annually.
Submission of Financial Statements by ROC: Under the provisions of the Companies Act of 2013, every company is required to submit its financial statements properly within 30 days from the company’s annual general meeting.
Claiming Annual Refunds with the Registrar: Under the provisions of the Companies Act 2013, a company is required to file its annual return. The company’s annual return will contain all information relating to management, and shareholders and is required to be submitted on Form MGT-7 to the Registrar of Companies (ROC), within 60 days from the date of the annual meeting.
Amendment of Director’s Report: In terms of section 134 of the Companies Act 2013, a company is required to prepare a director’s report and complete Form AOC-4. Based on the directors’ report, the company can directly define the company’s financial position and the scope of the business for the company’s shareholders.
Income tax compliances
Section 8 companies are also required to comply with income tax compliances. In Section 8 companies the provision of corporate tax applies but there are certain exemptions granted under the income tax law. Taking advantage of this, Section 8 Company is required to achieve the following compliance:
A section 8 company is required to register under section 12AA of the Income Tax Act 1961 by completing Form 10A with the Chief Commissioner.
It must also comply with all the provisions of section 11 of the Income Tax Act 1961.
A Section 8 company will file its annual tax return on or before the due dates.
The Section 8 Company will comply with all other applicable provisions of the Income Tax Act 1961.
What are the benefits of complying with all the annual compliance of Section 8 companies in India?
All companies registered under the Companies Act of 2013 are required to comply with all applicable laws. If any compliance can be completed by the company it means that the company is required to pay several penalties. To avoid the number of fines and subsequent benefits, companies need to comply with all annual obligations-
Better Company Integrity- Companies that adhere to all compliance during working hours are qualified to create better trust. Based on better trust, companies can use financial assistance from banks, financial institutions, and other authorities.
Build Trust between investors, customers, and sellers – where the company complies with all compliance during the working period and provides fair financial information to the user of the financial statements then there can be built trust between sellers, investors, lenders, etc.
Avoid Legal Issues- If any company is required to comply with any of the requirements and such compliance does not comply with the company then the company will deal with certain legal issues and legal issues. In the event of such legal issues, he may receive notification from the authorities. To avoid these legal issues it is necessary to comply with all legal compliance.
Transparency in the operation of the Company – The financial statements and the company’s annual returns describe the financial performance and financial position of the company and in which the company submits all these required statements and details within a specified period.
Avoid Paying Penalties – If the company complies with all compliance during the period when there will be no penalty opportunities for the company to avoid the amount of the fine.
Section 8 companies are required to comply with all compliance charged by Income Tax Authorities and the Registrar of Companies. If any company fails to comply with any income tax requirement or corporate action means that the company is required to pay a fine and in some cases, its directors may receive a temporary disqualification.
CS Urvashi Jain is an associate member of the Institute of Company Secretaries of India. Her expertise, inter-alia, is in regulatory approvals, licenses, registrations for any organization set up in India. She posse’s good exposure to compliance management system, legal due diligence, drafting and vetting of various legal agreements. She has good command in drafting manuals, blogs, guides, interpretations and providing opinions on the different core areas of companies act, intellectual properties and taxation.
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