Company tax return for non-profit companies in India
Company tax return for non-profit companies in India
Company tax return for non-profit companies in India
Filing a company tax return for non-profit companies in India, also known as Section 8 companies under the Companies Act, involves specific steps and considerations. As of my last update in September 2021, here's a general overview of the process for filing a company tax return for non-profit companies in India. However, please keep in mind that tax laws and regulations may change over time, so it's essential to consult with a qualified tax professional or refer to the latest information from the Indian tax authorities for the most up-to-date guidance.
1. Legal Structure:
Non-profit companies in India are incorporated under Section 8 of the Companies Act, 2013. The primary objective of these companies is to promote charitable or not-for-profit activities for the public welfare. The tax implications and exemptions will differ based on their status as non-profit entities.
2. Obtain Section 12AA and 80G Certificates:
Non-profit companies must obtain Section 12AA registration from the Income Tax Department to avail of tax exemptions on their income. Additionally, they may also apply for an 80G certificate, which allows donors to claim tax deductions for their donations made to the non-profit company.
3. Maintain Proper Accounts:
Non-profit companies should maintain proper books of accounts and financial records in accordance with the accounting standards and the Income Tax Act.
4. Tax Exemptions:
Non-profit companies enjoy various tax exemptions under the Income Tax Act, such as exemptions on income received from donations, grants, or government sources, provided such income is used for charitable purposes.
5. File Income Tax Return:
Non-profit companies are required to file an income tax return even if they have tax exemptions. They should use the appropriate Income Tax Return (ITR) form designated for non-profit companies, such as ITR-7.
6. Form 10BB:
Non-profit companies are required to furnish Form 10BB along with the tax return. Form 10BB provides details of the application of income and ensures that the company adheres to the requirements for availing tax exemptions.
7. Tax Audit (if applicable):
Non-profit companies may be required to get their accounts audited by a chartered accountant if their total income exceeds the specified threshold. For the Financial Year 2021-22 (Assessment Year 2022-23), the audit threshold for non-profit companies was set at Rs 15 lakh.
8. Pay any Tax Due (if not eligible for full exemptions):
If the non-profit company has any income that does not qualify for tax exemptions, it should pay tax on such income.
9. Maintain Compliance Records:
Keep copies of all filed tax returns, audited financial statements, and relevant documents for future reference and in case of any tax audits or inquiries.
Non-profit companies play a crucial role in providing social and charitable services. To ensure accurate and compliant tax filing, it is advisable for such entities to seek advice from tax professionals with expertise in dealing with tax matters related to non-profit organizations. This will help ensure accurate and timely filing of the company's tax return and adherence to applicable tax laws and regulations pertaining to non-profit entities.
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