Section 8 Companies to Submit Project-wise Financial Statements

In a landmark regulatory development, the Ministry of Corporate Affairs (MCA) has directed all eligible Section 8 companies to submit project-wise financial statements as part of their annual compliance requirements. This directive is aimed at improving transparency and enabling more precise tracking of how charitable funds are utilized for specific initiatives under the Companies Act, 2013.

The new mandate requires Section 8 companies to break down their financial disclosures by individual projects or programs. Each project report must detail income received, funds allocated, actual expenditure incurred, and any unspent balances. The reporting must also include narrative descriptions of objectives, outcomes, and beneficiary reach, backed by relevant documentary evidence or audit certifications.

Applicable from the current financial year, the rule is mandatory for companies receiving significant funding, including Corporate Social Responsibility (CSR) contributions, government grants, or foreign donations. These project-level disclosures must be submitted along with the standard filings—Form AOC-4 and MGT-7—and uploaded via the MCA portal.

Officials stated that this move aims to close loopholes that have previously allowed aggregation of accounts, making it difficult to assess whether funds were applied effectively to the purposes they were earmarked for. By ensuring granular reporting, the government seeks to strengthen oversight and reinforce accountability within India’s expanding non-profit ecosystem.

Sector experts have welcomed the step, noting it will enhance donor confidence, curb fund misappropriation, and enable data-driven governance. Section 8 companies are advised to begin implementing internal systems and financial controls that support real-time project tracking and transparent bookkeeping.

This policy is expected to reshape the compliance culture among non-profits, fostering a more structured, outcome-oriented approach to social impact reporting in India.