Annual Compliances of Section-8
Annual compliances of section-8 blogs.
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Annual Compliances of Section-8 Company
Annual compliance refers to the set of mandatory filings, disclosures, and procedures that a company must complete every financial year to comply with applicable laws and regulations. For a Section 8 Company (a non-profit company registered under the Companies Act, 2013 in India), annual compliance ensures the company remains legally recognized, maintains transparency, and avoids penalties.
What is a Section 8 Company?
A Section 8 Company in India is a type of company registered under Section 8 of the Companies Act, 2013 (earlier Section 25 of the Companies Act, 1956). These companies are non-profit organizations formed with the objective of promoting Commerce, Art, Science, Sports, Education, Research, Social welfare, Religion, Charity, Protection of environment or any other such charitable purpose.
MCA COMPLIANCES
INC-20A
INC-20A is a form prescribed under the Companies Act, 2013 in India. INC-20A form is used to declare that the company has commenced its business operations. It ensures that the company has met the statutory requirement of receiving the minimum subscription amount from shareholders before starting business activities. Please note it is filed once in the lifetime of the company.
Timeline:
Companies are required to file INC-20A within 180 days from the date of Incorporation.
Fees Structure:
| Capital | Fees (₹) |
|---|---|
| Less than 1,00,000 | 50 |
| 1,00,001 - 5,00,000 | 100 |
| 5,00,001 - 10,00,000 | 150 |
| 10,00,001 - 25,00,000 | 200 |
| 25,00,001 - 1,00,00,000 | 400 |
| Above 1,00,00,000 | 600 |
Late Fees and Penalties:
Failure to file INC-20A within the stipulated time can lead to penalties on both the company and directors. Late fee depends upon the number of days delayed in filing of INC-20A after stipulated time period of 180 days has lapsed.
| Number of Days Delayed | Late Fees |
|---|---|
| Up to 30 days | 2 times of normal fees |
| 31 to 60 days | 4 times of normal fees |
| 61 to 90 days | 6 times of normal fees |
| 91 to 180 days | 10 times of normal fees |
| Above 180 days | 12 times of normal fees |
If INC-20A is not filed within 180 days and additional 180 days extended time, a penalty of ₹50,000 will be imposed on the company and ₹1,000 per day will be charged on the director (maximum ₹1,00,000). The company name can also be struck off by MCA if this compliance is not followed.
DIN-KYC
DIN-KYC (Director Identification Number – Know Your Customer) is a regulatory process mandated by the Ministry of Corporate Affairs (MCA) in India after the end of every financial year (31st March). Its primary purpose is to ensure transparency and accountability in corporate governance. This process involves verifying the identity and address details of directors.
Applicability:
The DIN-KYC process is applicable to all individuals who have been allotted a Director Identification Number (DIN) by the MCA.
Purpose:
- Transparency and Accountability: DIN-KYC promotes transparency by verifying director identities, enhancing credibility among stakeholders.
- Prevention of Fraud: Helps reduce the risk of fraudulent activities by verifying the authenticity of directors.
- Regulatory Compliance: Ensures compliance with MCA regulations, maintaining company structure integrity.
Timeline:
DIN-KYC must be done after 31st March and before 30th September every year.
Fees:
There is no government fee applicable for DIN-KYC.
Late Fees:
If the form is not filed before 30th September, the DIN gets deactivated by the MCA and a fee of ₹5,000 is charged to the director.
ADT-1
ADT-1 is a form prescribed by the Ministry of Corporate Affairs in India. It is used to inform the ROC about the appointment of an auditor for a company.
Who can be an auditor of a company?
A qualified Chartered Accountant or a firm of Chartered Accountants can be an auditor of a company.
What are the qualifications of an auditor?
- An auditor must be a qualified Chartered Accountant or a member of a recognized accountancy body.
- An auditor must have experience in auditing financial statements, accessing internal controls, and have well knowledge of accounting principles.
- The auditor being registered with the appropriate regulatory body, such as Institute of Chartered Accountants of India (ICAI) for Indian companies is mandatory.
Applicability of ADT-1:
ADT-1 form is applicable for all companies registered under the Companies Act, 2013 in India.
Timeline:
Form ADT-1 must be filed with the ROC within 15 days from the date of appointment of the auditor at the company’s general meeting.
Fees:
The fees applicability is depending on the authorized share capital of the company.
| Capital | Fees (₹) |
|---|---|
| 0 - 1,00,000 | 200 |
| 1,00,001 – 4,99,999 | 300 |
| 5,00,00 – 24,99,999 | 400 |
| 25,00,00 – 99,99,999 | 500 |
| 1,00,00,000 or more | 600 |
Late Fees:
Late fee depends upon the number of days delayed in filing of ADT-1.
| Number of Days Delayed | Late Fees |
|---|---|
| Up to 30 days | 2 times of normal fees |
| More than 30 days - up to 60 days | 4 times of normal fees |
| More than 60 days - up to 90 days | 6 times of normal fees |
| More than 90 days - up to 180 days | 10 times of normal fees |
| Above 180 days | 12 times of normal fees |
AOC-4
AOC-4 form is a prescribed document by the Ministry of Corporate Affairs (MCA) in India. AOC-4 is used for filing financial statements such as Balance Sheet, Profit & Loss A/C, Cash Flow Statement, etc., by the companies with the Registrar of Companies (ROC) annually.
Applicability of AOC-4:
Form AOC-4 is applicable to all types of companies registered under the Companies Act, 2013, including private companies, public companies, and one-person companies (OPCs).
Timeline:
The AOC-4 form must be filed with the ROC within 30 days from the date of the Annual General Meeting (AGM) of the company.
Fees:
The fees applicability is depending on the authorized share capital of the company.
| Capital | Fees (₹) |
|---|---|
| 0 - 1,00,000 | 200 |
| 1,00,001 – 4,99,999 | 300 |
| 5,00,00 – 24,99,999 | 400 |
| 25,00,00 – 99,99,999 | 500 |
| 1,00,00,000 or more | 600 |
Late Fees:
Late fee depends upon the number of days delayed in filing of AOC-4.
| Number of Days Delayed | Late Fees |
|---|---|
| Up to 30 days | 2 times of normal fees |
| More than 30 days - up to 60 days | 4 times of normal fees |
| More than 60 days - up to 90 days | 6 times of normal fees |
| More than 90 days - up to 180 days | 10 times of normal fees |
| Above 180 days | 12 times of normal fees |
MGT-7 / 7A
MGT-7 form is a prescribed document by the Ministry of Corporate Affairs in India. It is also known as Annual Return. MGT-7 form is used by the companies to provide details about their share capital, company’s financial position, indebtedness, governance structure, and other important information to the Registrar of Companies (ROC) annually.
Applicability of MGT-7 / 7A:
Form MGT-7 is applicable to all types of companies registered under the Companies Act, 2013, including private companies, public companies, and one-person companies (OPCs).
Form MGT-7A is applicable for One Person Companies (OPC) and small companies whose:
- Paid-up share capital not exceeding Rs.2 crore or such specified higher amount shall not exceed Rs.10 crore.
- Turnover not exceeding Rs.10 crore or such specified higher amount shall not be more than Rs.100 crore.
Fees:
The fees applicability is depending on the authorized share capital of the company.
| Capital | Fees (₹) |
|---|---|
| 0 - 1,00,000 | 200 |
| 1,00,001 – 4,99,999 | 300 |
| 5,00,00 – 24,99,999 | 400 |
| 25,00,00 – 99,99,999 | 500 |
| 1,00,00,000 or more | 600 |
Late Fees:
Late fee depends upon the number of days delayed in filing of AOC-4.
| Number of Days Delayed | Late Fees |
|---|---|
| Up to 30 days | 2 times of normal fees |
| More than 30 days - up to 60 days | 4 times of normal fees |
| More than 60 days - up to 90 days | 6 times of normal fees |
| More than 90 days - up to 180 days | 10 times of normal fees |
| Above 180 days | 12 times of normal fees |
DPT-3
DPT-3 serves as a means for companies which is used for filing returns of deposits and details for outstanding loan or particulars of transactions not considered as deposits by the companies with the Registrar of Companies (ROC).
Applicability:
DPT-3 form is applicable to all types of registered companies.
Fees:
The fees applicability is depending on the authorized share capital of the company.
| Capital | Fees (₹) |
|---|---|
| 0 - 1,00,000 | 200 |
| 1,00,001 – 4,99,999 | 300 |
| 5,00,00 – 24,99,999 | 400 |
| 25,00,000 – 99,99,999 | 500 |
| 1,00,00,000 or more | 600 |
Late Fees:
Late fee depends upon the number of days delayed in filing of DPT-3.
| Number of Days Delayed | Late Fees |
|---|---|
| Up to 30 days | 2 times of normal fees |
| More than 30 days - up to 60 days | 4 times of normal fees |
| More than 60 days - up to 90 days | 6 times of normal fees |
| More than 90 days - up to 180 days | 10 times of normal fees |
| Above 180 days | 12 times of normal fees |
Others MCA Compliances
AGM - Annual General Meeting
Annual General Meeting (AGM) is a mandatory yearly gathering of a company’s shareholders and directors in which various matters such as company’s performance, financial results, appointment of directors, appointment of auditor, vote on important matters, and other important decisions are discussed and decided upon.
First AGM of New Companies
The first AGM of a new company typically occurs within nine months from the end of the financial year in which company was incorporated.
Frequency
An AGM must be held by every company at least once every calendar year. The interval between two AGMs should not exceed fifteen months.
Notice Period for AGM
Shareholders must be notified of the AGM in advance, usually through a formal notice. The minimum notice period of 21 days is mandated by the Companies Act, 2013 in India.
Timing and Locations
AGMs are typically held during the business hours on weekdays. AGMs can take place at the company’s registered office or headquarters, conference centers or hotels in major cities, etc.
Participation
Shareholders have the right to attend, vote and speak at the AGM. If a shareholder is unable to attend the meeting, he/she may appoint proxies to attend and vote on their behalf.
Quorum
Quorum refers to the minimum number of members required to be present at a meeting. Quorum for Annual General Meeting of a Section 8 Company is:
- Two members present at the meeting if the total number of members is up to five.
- Two members present at the meeting if the total number of members are more than five but up to hundred members.
- Five members present at the meeting if the total number of members are more than hundred.
EGM - Extraordinary General Meeting
Extraordinary General Meeting (EGM) is a meeting of a company's shareholders that is convened outside the regularly scheduled Annual General Meeting (AGM) to address specific urgent matters or matters that require shareholder approval.
Purpose
EGMs are called to discuss and vote on important matters that cannot wait until the next AGM.
Timings
Unlike AGMs, which are held annually, EGMs are held on an ad-hoc basis as and when required.
Notice Period
The minimum notice period of 21 days is mandated by the Companies Act, 2013 in India.
Quorum
- Two members present at the meeting if the total number of members is up to five.
- Two members present at the meeting if the total number of members are more than five but up to hundred members.
- Five members present at the meeting if the total number of members are more than hundred.
Minutes
Minutes in an Extraordinary General Meeting (EGM) are concise, official records summarizing the discussions, decisions, and actions taken during the meeting, providing an accurate account of proceedings.
Register of Section-8 Company
In a company, various registers are maintained to comply with legal requirements and ensure accurate record-keeping of important company information. There are many types of registers prepared in a company:
MINUTE’S BOOKS
This book contains records of the proceedings and resolutions passed at the company's shareholder meetings, board meetings, and committee meetings. Minutes serve as a crucial document for documenting and preserving the company's decision-making process and ensuring transparency and accountability.
Minutes books include:
- Date, time, and location of the meeting
- Decisions made, resolutions passed, or actions taken by the participants
- Names of attendees, including shareholders, directors, officers, and any other participants
- Details of any appointments or elections conducted during the meeting
- Any voting results, including the number of votes in favor, against, or abstaining
- Any announcements, disclosures, or other important information shared during the meeting
BOARD RESOLUTION
A board resolution is a formal decision or directive passed by the board of directors of a company during a board meeting. It serves as a formal record of the board's decision-making process and outlines the actions or decisions taken by the board on behalf of the company.
Board resolutions are usually documented in writing and signed by the members of the board or their proxies. They may also include specific details such as:
- The date of the resolution
- The location of the meeting
- The names of the directors present
Once passed, board resolutions are legally binding on the company and its stakeholders, and they may need to be filed with regulatory authorities or included in corporate records.
GST Compliances
GSTR-1
Content:
- Details of outward supplies made to registered taxpayers (B2B supplies).
- Details of outward supplies made to unregistered taxpayers (B2C supplies) where the invoice value exceeds Rs.2.5 lakhs.
- Summary of exports and supplies made to SEZs.
- Details of debit and credit notes issued during the reporting period.
- Amendments to invoices or credit/debit notes issued in previous periods.
Due Date:
- For Monthly Filers: 11th of the following month.
- For Quarterly Filers: 13th of the month following the end of the quarter.
Late Fees:
Late filing of GSTR-1 attracts a late fee of Rs.50 per day (Rs.20 for taxpayers having Nil Tax liability) subject to a maximum of Rs.5000.
GSTR-3B
Content:
- Details of outward supplies (sales) including both taxable and exempt supplies.
- Summary of inward supplies (purchases) including imports and purchases liable for reverse charge.
- Calculation of input tax credit (ITC) availed on purchases.
- Summary of tax liability including IGST, CGST, SGST/UTGST, and cess payable.
- Details of tax paid and any amount payable after adjusting the input tax credit.
- Amendments to the previous months return if required.
Due Date:
The due date for filing GSTR-3B is typically the 20th of the following month. For example, the return for the month of January is due by February 20th.
Late Fees:
Failure to file GSTR-3B by the due date attracts a late fee of Rs.50 per day (Rs.20 for taxpayers with nil tax liability) up to a maximum of Rs.5000.
GSTR-9
GSTR-9 is an annual return form that must be filed by registered GST taxpayers in India if the annual turnover of the taxpayer is above 2 crores but below 5 crores.
Content:
It includes consolidated details of:
- Outward and inward supplies
- Input Tax Credit (ITC)
- Tax paid
- Refunds and demands
- Other compliance-related data for the full financial year
Due Date:
The due date for filing GSTR-9 is 31st December following the end of the relevant financial year.
Late Fees:
A late fee of INR 200 per day (INR 100 under CGST and INR 100 under SGST) is levied for delay in filing GSTR-9. However, there’s a catch: the late fee is subject to a maximum of 0.25% of the taxpayer’s total turnover in the relevant state or union territory.
GSTR-9C
GSTR-9C is a reconciliation statement between:
- The audited annual financial statements of a taxpayer
- The details reported in GSTR-9 (annual return)
It must be certified by a Chartered Accountant (CA) or Cost Accountant. It is filed when the turnover exceeds the threshold limit of Rs. 5 crores.
Content:
GSTR-9C has two parts:
Part A: Reconciliation Statement
- Reconciliation of turnover declared in GSTR-9 with audited financials
- Reconciliation of tax paid vs tax payable
- Reconciliation of ITC claimed vs booked
Part B: Certification
- Signed and certified by a CA or Cost Accountant.
- Can be based on full audit or limited review, with observations.
Due Date:
The due date for filing GSTR-9C is 31st December following the end of the relevant financial year.
Late Fees:
Late fee of Rs. 200 per day (Rs. 100 each for CGST and SGST) up to a maximum of 0.5% of the taxpayer's turnover in the relevant state or union territory.
Income Tax Compliance
Income tax is a direct tax levied on the income earned by individuals, businesses, and other entities within a specific jurisdiction, typically by the government. It is one of the primary sources of revenue for the government and is used to fund various public expenditures, including infrastructure development, social welfare programs, defense, and other essential services.
There are seven types of ITR but for Section 8 company only two ITRs are applicable. i.e ITR 6 and 7.
ITR 6
ITR-6 is an income tax return form prescribed by the Income Tax Department of India for companies other than those who are claiming exemptions under section 11 of Income Tax Act, 1961.
Who should file ITR-6?
- Domestic companies:
All domestic companies incorporated under the Companies Act, 2013 whose income are not exempted under section 11 of the Act need to file ITR-6.
Domestic companies include:
- Private Limited Companies
- Public Limited Companies
- One Person Companies (OPCs)
- Section 8 Companies (Non-Profit Companies), etc.
- Foreign companies:
Foreign companies operating in India through a branch or office whose income is not exempt under Section 11 are also required to file their income tax returns using ITR-6.
- Other Corporate Entities:
Other corporate entities, such as cooperative societies, local authorities, and other corporate bodies, whose income is taxable and not exempt under Section 11, should also file their income tax returns using ITR-6.
Due Dates:
The due dates for filing ITR-6 can vary depending on the entity’s circumstances and any extensions provided by the Income Tax Department. Generally:
- For entities requiring audit: usually September 31st of the assessment year.
- For entities not requiring audit: typically July 31st of the assessment year.
Note: Always check for official extensions or changes in due dates announced by the authorities.
Late Fees:
- If the taxpayer files the ITR after the due date but before December 31 of the assessment year, a late filing fee of ₹5,000 may be levied.
- If the taxpayer files the ITR after December 31 of the assessment year, a late filing fee of ₹10,000 may be levied.
- However, if the total income of the taxpayer does not exceed ₹5,00,000, the maximum late filing fee will be restricted to ₹1,000.
ITR 7
ITR-7 Form is specifically designed for firms, companies, local authorities, associations of persons (AOPs), and artificial judicial persons who wish to file their Income Tax Returns. It applies to those claiming exemptions in the following categories:
- Under Section 139(4A): Charitable or Religious Trusts
- Under Section 139(4B): Political Parties
- Under Section 139(4C): Scientific Research Institutions
- Under Section 139(4D): Universities, Colleges, Institutions, or Khadi and Village Industries
Due Dates:
The due dates for filing ITR-7 can vary depending on the entity’s circumstances and any extensions provided by the Income Tax Department. Generally:
- For entities requiring audit: usually September 31st of the assessment year.
- For entities not requiring audit: typically July 31st of the assessment year.
Note: Always check for official extensions or changes in due dates announced by the authorities.
Late Fees:
- The penalty for filing ITR-7 late can be up to ₹5,000 if filed after the due date but before December 31st of the assessment year.
- The penalty increases to ₹10,000 if filed after December 31st.
TDS Compliances
Tax Deducted at Source (TDS) is a method where tax is deducted from income (like salaries or interest payments) at the point of generation and directly remitted to the government. It ensures advance collection of taxes and reduces tax evasion, easing the tax payment process for the recipient.
TDS Returns
- Form 24Q: This return is filed for TDS deducted on salaries.
- Form 26Q: Filed for TDS deducted on all payments other than salaries.
- Form 27Q: Used for TDS deducted on payments made to non-residents other than salary.
- Form 27EQ: Filed for TDS deducted on tax collected at source.
Due Dates of TDS
TDS Deduction Due Date:
Tax must be deducted at source at the time of making specified payments or credit to the payee’s account,
whichever is earlier. The due date for TDS deduction is typically at the time of payment or credit, as per
the provisions of the Income Tax Act.
TDS Deposit Due Date:
After deducting TDS, the deductor is required to deposit the tax amount with the government. The due date
for depositing TDS is generally the 7th of the following month, except for March, where it’s typically April
30th.
TDS Return Due Dates:
The deductor must file quarterly TDS returns providing details of TDS deducted and deposited. The due dates
for filing TDS returns are as follows:
| Quarter | Months | Due Date |
|---|---|---|
| Q1 | April – June | July 31 |
| Q2 | July – September | October 31 |
| Q3 | October – December | January 31 |
| Q4 | January – March | May 31 |
Late Fees
- If a deductor fails to file the TDS return within the due date, they are liable to pay a late filing fee. As per Section 234E, the late fee is ₹200 per day for each day of default, starting from the day immediately following the due date of filing the TDS return until the date of actual filing of the return.
- However, the late fee cannot exceed the total amount of TDS deducted or ₹5,000, whichever is lower. This means that even if the delay is substantial, the late fee cannot exceed ₹5,000.
ESIC / EPFO Compliances
What is ESIC?
ESIC stands for the Employees State Insurance Corporation, which is a social security organization in India established under the Employees State Insurance Act, 1948. ESIC provides a range of benefits to employees, including medical, cash, maternity, disability, and dependent benefits, to ensure their welfare and protect them against unforeseen contingencies such as sickness, maternity, temporary or permanent disablement, and death due to employment injury.
What is EPFO?
EPF stands for Employees Provident Fund, which is a social security and retirement savings scheme in India. It is regulated and managed by the Employees Provident Fund Organization (EPFO), a statutory body under the Ministry of Labor and Employment, Government of India. EPF is a compulsory savings scheme for employees in certain sectors and industries.
ESIC Compliances
- Applicability: If a Section 8 Company employs 10 or more employees (whether contractual, temporary, or permanent) on any day during the preceding 12 months, it becomes eligible for ESIC registration.
- Employee & Employer Contribution: The employee's contribution towards ESIC is 0.75% of wages. The employer's contribution is 3.25% of the employee’s wages.
- Registration: Section 8 companies must register with ESIC within 15 days from the date of applicability.
- Monthly Returns: Monthly contribution details including employee wages and contributions must be filed with ESIC.
- Payment of Contribution: ESIC contributions must be deposited monthly, due by the 15th of the following month.
What if ESIC Returns are not filed on time?
- Late Filing Fees: Imposed based on duration of delay and number of employees.
- Interest Charges: May be charged on outstanding amounts.
- Maximum Late Fee: Capped at ₹5000 per return.
- Legal Consequences: May include penalties and legal proceedings.
ESIC Returns Due Dates
- April to September: On or before November 12th of the same financial year.
- October to March: On or before May 12th of the subsequent financial year.
EPFO Compliances
- Applicability: If a Private Limited Company employs 20 or more employees (contractual, temporary, or permanent) on any day during the preceding 12 months, EPFO registration is mandatory.
- Employee & Employer Contributions: Both contribute 12% of basic salary, dearness allowance, and retaining allowance, subject to government limits.
- Deposit of Contributions: Must be deposited monthly with EPFO.
- Returns Filings: Monthly EPF returns are mandatory with contribution details.
- Issuance of EPF Statements: Must be provided to employees with contribution and interest details.
What if EPF Returns are not filed on time?
- Late Filing Fees: Penalties vary with duration of delay.
- Interest Charges: Levied on delayed contributions.
- Legal Consequences: Can result in notices, inspections, and enforcement actions.
- Accumulation of Dues: Unpaid dues lead to financial burden due to interest and penalties.
EPF Return Due Date:
15th of every next month.
Late Fees:
- For Employers with up to 5 Employees: No late fee.
- For Employers with 6 or More Employees: ₹100 per day of delay for each month of default.
Accounting
Accounting is the process of recording, summarizing, analyzing, and reporting Financial transactions of a business or organization. It involves systematically Recording financial data to produce financial statements and reports that provide Insights into the financial health and performance of the entity. Private Limited Companies are required to maintain proper books of accounts, including records of all transactions, assets, liabilities, income, and expenses. The books of accounts should be kept at the registered office of the company and should provide a true and fair view of the company's financial position.
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