Section 8 Company Registration

The 2013 Companies Act’s provisions allow for section 8 company registration. Promoting the arts, trade, and other endeavors are Section 8 companies’ primary goals which is not for profit. Section 8 business formation is recommended because it offers a number of advantages, including tax advantages, the elimination of stamp duty, and increased credibility. It is also termed a foundation, society, or federation which is not registered to earn profit.

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Section 8 Company – Overview

An NGO may be incorporated under Section 8 of the Companies Act of 2013, as a trust or society under the Societies Act of 1860, or as a Section 8 company under the Trust Act of 1882. The process of incorporating an NGO under the Companies Act of 2013 is Section 8 Company Registration.

A section 8 company can be set up to promote things like religion, charity, social research, sports, education, the arts, science, commerce, technology, and environmental protection. After completing the registration process successfully, a Section 8 Company is permitted to operate anywhere in India.

Benefits

The following are some benefits of forming an NGO or NPO under Section 8 of the 2013 Companies Act. Here are a few of them:

No minimum capital requirement: A Section 8 company registration in India does not have a minimum capital requirement.

Tax Benefits: Section 8 Company Registration in India offers a variety of tax advantages.

No Stamp Duty: Since the MoA and AoA of the private limited company require the payment of stamp duty, there is no stamp duty applied to the incorporation of a Section 8 Company in India.

Separate Legal Identity: A separate legal entity is created when a section 8 company is registered. It receives a unique legal identity from its constituents.

Credibility: Compared to other types of charitable organizations, Section 8 Company has the highest level of credibility. It is within the rigorous guidelines of the Companies Act that a yearly audit is required.

Exemption for the donors: If the section 8 firm is registered under section 80G, the exemption is given to the donors under section 80G.

Eligibility Criteria

The following are the requirements for a Section 8 company registration:

  • To register a Section-8 firm in India, you must be an individual, HUF, or limited company.
  • Any two or more individuals who will serve as the company’s shareholders or directors must adhere to all the rules and regulations outlined in the Section 8 Company Registration.
  • A resident of India must make up at least one of the directors. However, a corporation may join a company that is registered under this section.
  • Sports, social welfare, the growth of science and the arts, education, and financial aid to low-income people should all be priorities.
  • The surplus created must only be applied to achieving the section 8 company’s main goal.
  • The company’s founders, members, and directors are not eligible to receive any compensation in cash or in kind.
  • There should be no direct or indirect distribution of profits to the company’s directors and members.
  • The business should have a defined three-year project plan and vision.

Documents Required

  • PAN Card of the Directors and Shareholders
  • Aadhaar Card
  • Latest Bank Statement
  • Telephone Bill or Electricity Bill
  • Voter ID or Passport or Driving license
  • Passport size photograph of all the directors and shareholders
  • Copy of the Rental agreement, in case the property is on rent for the registered office

Post Registration Compliances

Section 8 Company must comply with the same annual regulations as other businesses.

  • Arranging at least two board meetings per year.
  • Upkeep of the books of accounts
  • Making Financial Statements
  • Required Audit
  • Filing of income tax returns
  • Financial statements must be submitted on Form AOC 4
  • Every year, an annual return must be submitted along with additional e-filing forms like MGT 7
  • Additional requirements, such as 12AA and 80G, to complete the registration

FAQ’s

Non-profit organization company is yet another label for a section 8 company. NGO is a common abbreviation for a non-profit organization. According to the Trust Act or Section 8 of the 2013 Companies Act, an NGO may register (earlier Section 25 of Companies Act 1956). The registration of an NGO can be done to further various causes, including those that support religion, charity, sports, education, social research, and environmental protection.
The Section 8 Company Registration in India serves the following purposes.
  • Education
  • Poverty
  •  Illness
  • Blood bank
  • Environmental safeguards
  • Additional items of broad public utility.
Yes, we must request the central government’s authorization or approval before registering a section 8 corporation in India. Prior to section 8 company registration, CG clearance is sought.

Yes, registering a section 8 corporation is more expensive than registering a trust or society.

1. There should be at least two Board meetings each year.

2. Required Audit

3. Annual returns must be submitted annually along with other electronic filing forms including MGT 7 and AOC.

4. An annual income tax return must be filed.

5. Additional requirements, such as 12AA and 80G, to complete the registration

The following are the drawbacks associated with section 8 company registration:

1. Starting a Section 8 company is difficult since it needs approval from the central government.

2. The cost of complying with Section 8 is higher than that of any other trust or society.

3. Section 8 Company’s heavy penalty restrictions.

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