Section 8 Company Registration - Attention NGOs & Non-Profit Organisations
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Must Know Facts about Section 8 Company
Section 8 Companies pursue non-profit goals like trade, business, arts, charity, education, religion, environment protection, social welfare, sports research, etc.
In India, a non-profit organisation can be registered under the Registrar of Societies or as a Non-profit company under Section 8 Company of the Company Act,2013. Section 8 Companies must have a minimum of two directors in case of Incorporation as a Pvt Ltd company and three directors incase of Incorporation as a Public Ltd company. Section 8 Companies have no minimum paid-up capital.
The profits of this company, if there are any, are applied towards promoting the company’s objectives and not distributed as dividends to its shareholders.
A Section 8 Company is the same as the Section 25 Company under the old Companies Act, 1956. It must intend to prohibit the payment of any dividend to its members.
Benefits of Section 8 Company
Being an NPO or Non-profit Organisation does not preclude the company from making a profit or earning an income. It simply means that the company can make money, but the promoters will not benefit. Profits cannot be shared among the promoters. All profits must be used to promote the object.
Nonetheless, certain exemptions and privileges are allowed for “NGOs and NPO” under Section 8 of the Companies Act 2013. There are numerous tax breaks available to such businesses. Donors who contribute to Section 8 Company can also receive a tax deduction for their contributions.
Distinct Legal Identity
Section 8 Company is a separate legal entity that differs from its members. The Company has perpetual existence along with having organised operations and greater flexibility.
Membership
A registered partnership firm can become a member in its individual capacity and obtain Directorship.
No Minimum Capital Requirement
Company can raise equity capital from persons or entities interested in becoming shareholders. Entrepreneurs can raise money from angel investors, venture capital, private equity, and hedge funds.
Name
Section 8 Company is not required to suffix “Public Limited or Private Limited” next to its legal name. It can be registered with names such as “Association, Society, Council, Club, Charities, Foundation, Academy, Institute, Organisation, and Federation”.
Zero Stamp Duty
A Section 8 Company is exempt from the requirement of paying stamp duty on the MoA and AoA of the private or public limited company, which is applicable for the registration of other kinds of company structures.
Exemption to the donors
Those donating to a Section 8 Company are eligible for tax exemptions u/s 12A and 80G of the Income Tax Act.
CARO
Requirements of the Companies Auditor’s Report Order or CARO do not apply to this type of company.
Credibility
Section 8 Companies are more reliable than all other charitable organisations. They are governed by the Companies Act and are regulated strictly. Such as the mandatory annual audit requirement and the “MOA and AOA” cannot be altered at any stage or situation. The rules on managing the profits and losses of the company make these companies trustworthy.
Tax Benefits
For Section 8 Companies in India, many tax benefits are granted.
Online Registration Process
Income Tax
The Company has to follow the provisions of the Income Tax Act.
GST Registration
If a Section 8 Company comes under the purview of the GST Act, it must get registered with GST.
Voting Rights
The voting rights of the shareholders of a Section 8 Company are based on the number of shares they hold. Similar to that of any other company.
Conversion
It may not convert itself to any other kind of company structure without complying with conditions, as applicable.
Minimum Requirement
A Section 8 Company gets incorporated by the MCA. All requirements of the Companies Act 2013, such as the minimum number of Directors and Shareholders, etc., must be met.
Management Team
Unlike other Trusts governed by the Trustees as per a Trust Deed, the operations of Section 8 Companies are managed by the Board of Directors as per their MoA and AoA.
MoA & AoA
A Section 8 Company shall not make any changes to the provisions of its MoA & AoA without seeking approval from the Central Government first.
Charitable Object
Section 8 Companies can only be formed for non-profit purposes. This Company’s profits or income are not to be dispersed among its members. This suggests that the income will be reinvested in the business or used to further the organisation’s principal goals, i.e. philanthropic reasons.
Companies Act, 2013
A Section 8 Company must follow the provisions prescribed under the Companies Act, 2013. It must perform all the tasks such as “Maintaining the Book of Accounts, Audits, Return Filing, Board Meetings, etc.”.
Donations/Funding Of Section 8 Company
Section 8 Companies are not permitted to raise capital through deposits, however they are permitted to take donations from the general public. Some of the ways it can raise funds are as follows:
Foreign Donations
Foreign donations are allowed only when FCRA (Foreign Contribution Regulation Act 1976) registration has been done. FCRA license can only be applied after 3 years from the registration date. However, if urgent foreign donations are necessary, you may apply for prior permission from the commissioner.
Equity Funding
Section 8 Company can also raise funds by issuing new equity shares at a higher value.
Domestic Donations
There is no limitation to domestic donations. But to avoid money laundering cases, a proper system must be laid down to keep them in check.
Registration Process of Section 8 Company
Step 1:
Obtaining DSC
Step 2:
Apply for the DIN
Step 3:
Application for the name availability
Step 4:
Submission of MOA and AOA to register a private limited company
Step 5:
ROC issues a certificate of incorporation with a PAN and TAN
Entire process will take 2 to 3 weeks (Approx)
Online Registration Process
Select the package that suits you.
a. list of services purchased
b. documents to be submitted or next action.
Make a payment, and you will receive your personalised dashboard login and password.
Once documentation is complete, you will be informed about the next steps through email and sms, and you can also check the current status of your request in your personalised dashboard.
During the process, if you have any queries, you can raise the query through the Helpdesk system in your dashboard, and we will be happy to help. We can have a call also if required.
Once you submit the required documents, our Compliance Manager will review the documents and contact you in case of any discrepancies.
At each step, our team will share all the required information you need and ensure that you have a smooth experience with us.
Key Registration Services: Tailored to Your Needs
Each Company differs in terms of the functions and mode of operations below registrations will be applicable on a need basis.
MSME Registration
MSME or Udyog Aadhaar registration is to be obtained in the business’s name to establish that Section 8 Company is registered with the Ministry of Micro, Small and Medium Enterprises.
TAN Registration
TAN registration must be obtained for Section 8 Company from the income tax department if the partnership firm is required to deduct any TDS while making any payments as per Income Tax Act 1961.
GST Registration
GST registration must be obtained if Section 8 Company sells goods or services that cross the GST turnover threshold limit for registration. In most states, GST registration is required for service providers having annual revenue of more than Rs 20 lakhs and in the case of traders-annual revenue of more than Rs. 40 lakhs.
Current Account
A current account can be opened for a Section 8 Company in any bank in India. We offer exclusive partnerships through which zero-balance current accounts can be opened.
Applicable Taxes and Annual Compliance
Statutory Auditor Appointment
Within 30 days of incorporation.
Annual Return
Companies registered in India must file MCA annual returns each year in forms AOC-4 and MGT-7/MGT-7A by 31st October and 3Oth November respectively.
Commencement of Business
The paid up capital mentioned in the MOA [Memorandum of Association] must be deposited in companies bank account, and a commencement certificate must be obtained from MCA within 180 days of Incorporation.
DIN KYC
The DIN KYC procedure must be completed each year by the company's directors by 30th September.
Income Tax Filing
Companies registered in India must file income tax returns each year in Form ITR-6 by 31st October.
GST Filing
GST must be filed if registration taken.
Financial Statement Preparation
Preparation of Financial Statements in accordance with schedule III of companies Act 2013 read with Companies (Accounting Standards) Rules, 2006.
Entire process will take 7 to 10 days (Approx)
Documents To Be Uploaded
For Directors:
- PAN Copy
- Aadhaar Copy/Voter’s ID/Passport/Driver’s License
- Latest Bank Statement/Telephone Bills/Mobile Bill/Electricity Bill/Gas Bill
- Passport Size Photograph
For Registered office:
- Electricity bill/Gas bill not older than two months
- Notarised rental agreement in English
- No-objection certificate from the property owner
- Sale deed/property deed in English (in case of owned property).
Pay as You Grow
Flexible Payment Options
We offer flexible packages to cater to your specific requirements:
Condition: Fees will be subject to change based on turnover and Income tax requirements
Frequently Asked Questions