Tax Structure for Microfinance Companies – ITR & Compliance Guide
Tax Structure for Microfinance Companies – ITR & Compliance Guide
✅ Introduction
Every Microfinance Company in India must follow proper tax and compliance rules.
Failure to comply can result in penalties, investigations, and loss of credibility.
👉 In this blog, we explain the Tax Structure for Microfinance Companies, the correct ITR forms, and how to maintain compliance smoothly.
🔹 Tax Rules for Microfinance Companies
- Section 8 Microfinance Companies are treated as “Not for Profit” under Companies Act.
- But they still need to pay tax on surplus income if no 12A/80G exemption is taken.
- As per Income Tax Act, all financial activities (loans, interest, fees) must be declared.
- GST may apply only if turnover crosses threshold (₹40L for goods, ₹20L for services).
🔹 ITR Filing Structure
1. ITR-5 (Recommended)
- Best for Section 8 Microfinance Companies without 12A/80G.
- Shows surplus income and pays normal corporate tax.
- Easier for banks and CIC to accept during loan/funding approval.
2. ITR-7 (For NGOs with Donations)
- Compulsory if 12A/80G exemption is taken.
- Requires filing of Form 10B/10BB Audit + 10BD/10BE Donation Reporting.
- Mostly for donation-based NGOs, not Microfinance companies.
👉 For pure Microfinance operations, ITR-5 is the safest choice.
🔹 Compliance Requirements
- Maintain Books of Accounts (Cashbook, Ledger, Loan Registers).
- Conduct Statutory Audit every year.
- File MCA Annual Returns (AOC-4, MGT-7).
- File Income Tax Return (ITR-5 or ITR-7) within due date.
- Keep Board Resolutions, Loan Agreements, Passbooks ready for inspection.
🔹 YouTube Video
Watch our detailed video on Microfinance Tax Structure:
🔹 Frequently Asked Questions (FAQ)
Q1. Which ITR should a Section 8 Microfinance Company file?
👉 ITR-5 is recommended if not taking 12A/80G.
Q2. What happens if I file ITR-7 without donations?
👉 You may face additional audit burdens (10B/10BB, 10BD/10BE).
Q3. Do Microfinance Companies need to pay GST?
👉 Only if turnover crosses GST threshold.
Q4. Why is ITR-5 better for Microfinance?
👉 Because it shows surplus income clearly and makes it easier for banks/CIC to trust your company for loans.
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- ✔ 600+ Microfinance Companies Supported
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- ✔ One-Stop Business Solution – ITR, Audit, GST, ROC, Legal Drafts, Training
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🔹 Call to Action
👉 Do you want to file your Microfinance Company ITR & Audit without errors?
👉 Guglymart Private Limited will manage your tax, compliance, and audit smoothly.
📞 Call Now: 7557813545 / 7602980506 / 9742656135
✉ Email: [email protected]
🌐 Website: www.guglymart.com
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