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.
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.
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.
- 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