Section 8 Company Audit and Compliances

An audit for a Section 8 company is a thorough examination of its financial records, transactions, and operations. This audit is conducted by a chartered accountant (CA) to ensure that the company’s financial statements are accurate, funds are utilized as per the stated objectives, and it adheres to all applicable laws. Section 8 companies must conduct an annual audit and submit an audit report.

Compliances for Section 8 Company:

Compliance refers to fulfilling the legal obligations of a Section 8 company, including:

• Annual Filing: Filing annual financial statements, auditor's report, and other statutory documents with the Registrar of Companies (RoC).
• Income Tax Return Filing: Section 8 companies must file their income tax returns annually.
• GST Returns (if applicable): Compliance with Goods and Services Tax (GST) regulations if the company’s turnover crosses the prescribed threshold.
• Annual General Meeting (AGM): Holding an AGM and filing necessary resolutions and minutes with RoC.
• Directors' Report and Board Meetings: Maintaining statutory records of directors’ reports and board meetings.

Benefits of Section 8 Company Audit and Compliances

• Legal Compliance: Ensures the company complies with the Companies Act, 2013, and other regulatory frameworks, avoiding penalties or legal issues.
• Transparency: Regular audits enhance transparency, making it easier for stakeholders to trust that funds are used for charitable purposes as intended.
• Financial Integrity: Audits help identify errors, omissions, or fraud, ensuring the proper financial health of the organization.
• Tax Exemptions: Section 8 companies are eligible for tax exemptions, provided they comply with the necessary filings and audits. Non-compliance may lead to the revocation of these benefits.
• Better Financial Management: Regular audits help the organization maintain clear and accurate records, which improves decision-making and financial management.
• Enhanced Reputation: Transparency in financial reporting enhances the organization’s reputation, especially when applying for grants or donations.

What’s the Process of Section 8 Company Audit and Compliances?

ETaxwala simplifies registration procedures for businesses in India:

• Understand Requirements: Assess the company’s specific needs based on its operations, income, and applicable regulations.
• Gather Financial Records: Collect necessary documents such as income statements, balance sheets, receipts, and records of transactions.
• Internal Review: Conduct an internal review to identify any discrepancies or gaps in financial management and operations.
• Engage External Auditor: Appoint a qualified chartered accountant (CA) to perform the statutory audit of financial records.
• Compliance Filings: File annual financial statements, income tax returns, and other necessary documents with the Registrar of Companies (RoC).
• Annual General Meeting (AGM): Hold an AGM to present the audited financial statements, report on the company’s performance, and approve the annual report.
• Post-Audit Reporting: Submit the audit report to the concerned authorities and address any queries or observations raised during the audit process.

Documents Required for Section 8 Company Audit and Compliances

ETaxwala simplifies registration procedures for businesses in India:

• Donations Received details during the period.
• Invoices of expenses incurred during the year.
• Credit Card Statements if Expenses are incurred by Proprietor on behalf on Company.
• Bank Statements from 1 April to 31 March for all bank accounts in the name of firm.

FAQs:

Q. Is audit mandatory for a Section 8 company?


Ans: Yes, an annual audit is mandatory for all Section 8 companies under the Companies Act, 2013.

Q. What are the key compliance requirements for Section 8 companies?


Ans: Section 8 companies must:
File annual returns and financial statements with the Registrar of Companies (RoC).
File income tax returns and GST returns (if applicable).
Hold AGMs and maintain records of board meetings.

Q. What is the penalty for non-compliance with Section 8 company requirements?


Ans: Failure to comply with Section 8 company requirements can lead to penalties, revocation of tax exemptions, and potential legal actions.

Q. Can ETaxwala help with overdue filings?


Ans: Yes, we assist with overdue compliance filings, including past-due annual returns, tax filings, and audits.

Q. Are Section 8 companies eligible for tax exemptions?


Ans: Yes, Section 8 companies are eligible for tax exemptions, provided they comply with all statutory requirements, including audit and filing obligations.

Q. How often do Section 8 companies need to hold board meetings?


Ans: Section 8 companies must hold at least one board meeting every quarter and an AGM once a year.

Q. Can Section 8 companies receive donations?


Ans: Yes, Section 8 companies can receive donations, but they must comply with income tax and regulatory requirements to maintain their tax-exempt status.