Section 8 Company Compliance Checklist for 2025

18 March 2025

Considering the Companies Act 2013, Section 8 companies are non-profit organizations. These organizations are considered non-profitable because they mainly focus on promoting various fields like commerce, arts, science, education, and social welfare, but not the profit. This is the reason they earn certain privileges, which are also subject to specific compliance requirements. It helps in maintaining the transparency and accountability of what these organizations do. 

Here, you can see some crucial compliances for Section 8 companies in India, which are inspired by the latest budget and tax updates (2025).

Compliance Requirements for Section 8 Companies

1. Statutory Compliance Requirements

a. Appointment of Auditor

It is mandatory for Section 8 companies to appoint an auditor within 30 days of their registration. The tenure of the auditor is typically five years. And companies must reveal the appointment details to the Ministry of Corporate Affairs (MCA) by filling out the Form ADT-1.

b. Maintenance of Statutory Registers

Furthermore, various statutory registers must be maintained religiously. These include the following to ensure transparency and insights into the company’s operations:

• Register of Members
• Register of Directors and Key Managerial Personnel
• Register of Loans and Investments

c. Conducting Meetings

For compliance, these companies must host meetings. These are really helpful in the documentation of the meeting agenda and compliance: 

• Board Meetings: One meeting every six months is necessary to hold for effective governance. It also maintains transparency and accountability in strategic decisions taken within it.
   
• Annual General Meeting (AGM): This is necessary within six months from the end of the financial year. It enables all stakeholders to know about a company's performance, vote on key decisions, and hold it accountable. 

d. Filing of Financial Statements and Annual Returns

The financial statements and annual returns must be an annual event. These filings should be completed within 30 and 60 days of the Annual General Meeting, respectively.

• Financial Statements: The auditor or compliance consultant can help in sharing the details of these companies’ financial performance through Form AOC-4.
• Annual Return: Form MGT-7 is basically filled to provide details into the company’s management and shareholders. 

2. Taxation and Financial Compliances

a. Income Tax Returns

Section 8 companies are no different from other companies in the context of filing income tax returns. They must file it by September 30th of each financial year. If the companies are registered under Section 12A and 80G of the Income Tax Act, they will be eligible to claim tax exemptions, given that their income is invested for charitable purposes. 

b. Goods and Services Tax (GST) Compliance

In case a Section 8 company’s annual turnover surpasses the precise limit, which is ₹40 lakh for goods and ₹20 lakh for services, it has to register for GST. This GST registration will facilitate it to claim input tax credit, or ITC, on goods and services it purchased for charitable acts. This will offload its tax liability to a certain extent. 

c. Tax Benefits and Exemptions

Section 8 companies can be registered under 12A and 80G, which benefit them with levers.

• Section 12A: The company registered under Section 12A can claim exemption on income tax over surplus income. But it can happen only if it has applied it towards charity. If its income exceeds the basic exemption limit, which is Rs. 2.5 lakh, the books of accounts and complementary documents in the prescribed format must be maintained.

If 85% of its income is not utilized for charitable activities, the remaining amount would be taxable in that year.

The tax will be imposed at a flat rate of 30% on specific incomes. These incomes can be accumulated funds for prohibited purposes, partial application of collected funds, provisions of excessive benefits to trustees, etc. The tax will be imposed without any reduction of set-off losses or expenditures or allowances. 

• Section 80G: The company registered under Section 80G enables donors to claim a deduction on what they have contributed for philanthropy.

3. Event-Based Compliances

There are certain events that may need the company to fulfill additional compliance requirements. These can be the following:

a. Change in Directors

If any of the directors has resigned or been recruited, this event must be reported to the MCA by filling out Form DIR-12. This process must be completed within 30 days of the amendment.

b. Alteration in Memorandum or Articles of Association

If the company has amended its objectives or operational guidelines, the details must be forwarded through Form MGT-14. And this should also be done within 30 days of passing the resolution. 

c. Significant Beneficial Ownership

There must be a register of all significant beneficial owners, where all changes to the Registrar of Companies (ROC) must be reported so that compliance with Section of the Companies Act, 2013, can be managed effectively. 

4. Penalties for Non-Compliance

If the company fails to comply, it can end up with these penalties and disadvantages:

• Monetary Penalties: The company and its officers can be penalized with fines.
• Legal Actions: There may be some legal actions taken against its directors or key managerial personnel.
• Loss of Tax Benefits: Tax exemptions under Sections 12A and 80G can be cancelled.

5. Impact of the 2025 Budget on Section 8 Companies

The 2025 Union Budget introduced a few measures that certainly affect non-profit organizations:

a. Enhanced Monitoring

The government has strictly increased scrutiny over fund management so that the funds are used for intended charitable purposes only. It also encourages transparency and accountability. 

b. Digital Compliance Systems

The new budget has necessarily implemented digital services for filing returns and maintaining records. The compliance processes are also simplified while reducing manual efforts and scope for errors. 

c. Revised Tax Benefits

The budget is now more crystal clear on tax exemptions and deductions so that more entities can register companies under Section 8 companies. This will certainly encourage people to do charitable activities.

Conclusion

Section 8 companies play a pivotal role in India's socio-economic development by addressing various societal needs. Adherence to statutory and tax compliance ensures their smooth operation, maintains public trust, and enables them to avail benefits that further their charitable objectives.