Managing compliance is crucial for Section 8 Companies to ensure smooth operations, avoid penalties, and maintain credibility with donors and regulatory bodies. Section 8 Companies are required to comply with various legal, tax, and financial regulations annually.
Why is Compliance Important?
- Legal Obligation – Ensures adherence to the Companies Act, 2013.
- Tax Benefits – Required to maintain 12A & 80G tax exemptions.
- Avoid Penalties – Prevents fines and legal actions due to non-compliance.
- Enhanced Credibility – Builds trust with donors, CSR funders, and the government.
- Smooth Operations – Ensures hassle-free financial transactions and banking processes.
Process Steps for SECTION -8 COMPLIANCE
1. Initial Compliance After Incorporation
- INC-20A (Declaration of Commencement of Business) – Must be filed within 6 months of incorporation, failure to do so leads to a penalty of ₹50,000 for the company and ₹1,000 per day for directors.
- ADT-1 (Appointment of Auditor) – Must be filed within 30 days of incorporation, failure to comply results in a penalty of ₹300 per month.
2. Annual ROC Filings with MCA
- AOC-4 (Financial Statements Filing) – Failure to file attracts a penalty of ₹100 per day.
- MGT-7 (Annual Return Filing) – Non-compliance results in a penalty of ₹100 per day.
- Board Resolutions & AGM Compliance – Proper records must be maintained.
3. Income Tax Filings & Exemptions
- ITR-6 Filing – Mandatory for NGOs, failure results in tax liabilities.
- 12A & 80G Renewal – Required for continued tax exemption.
- Tax Audit (if applicable) – Mandatory if turnover exceeds the prescribed limit.
- Form 10B – Mandatory tax audit report submission.
- Form 10BD – Details of donors to be submitted before 31st May every year.
- Form 10BE – Issued to donors as proof of donation for tax benefits.
Most NGOs miss these crucial filings, but Rapid Startup ensures complete compliance!
4. CSR & Grant Compliance
- CSR-1 Filing – Required for receiving CSR funding.
- Utilization Certificate (UC) – To report fund usage to grant authorities.
- FCRA Compliance (if applicable) – For NGOs receiving foreign contributions.
5. GST & Accounting Compliance
- GST Registration & Returns – If applicable (turnover above ₹20 lakh).
- TDS Compliance – Deduction & filing of TDS returns.
- Bookkeeping & Audited Financial Statements – Proper accounting practices.
