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Overview

Section 8 Company, also known as a non-profit company, is a type of organization established for promoting commerce, art, science, religion, charity, or any other socially beneficial objective. Here is an overview of Section 8 Company registration in India, including its benefits, procedure, required documents, and cost:
A Section 8 Company is incorporated under Section 8 of the Companies Act, 2013. Its primary objective is to promote charitable or non-profit activities, and it restricts the distribution of profits to its members. The company can be registered with or without a share capital.

Benefit

Benefits of Section 8 Company:
• Legal Recognition: Section 8 Company enjoys legal recognition and credibility, which can help in obtaining funding, grants, and partnerships.
• Tax Exemptions: Section 8 Companies can avail tax exemptions under the Income Tax Act, including exemptions on income, donations received, and certain benefits for the donors.
• Limited Liability: Members of a Section 8 Company have limited liability, meaning their personal assets are protected in case of any debts or liabilities of the organization.
• Perpetual Existence: A Section 8 Company has perpetual existence, ensuring continuity of operations even with changes in its membership.
• Charitable and Social Impact: Section 8 Companies can engage in activities that have a social or charitable impact, allowing members to contribute to causes they believe in.

Tax & Process

Here is an overview of the tax implications for Section 8 Company registration in India:

• Income Tax Exemptions: Section 8 Companies can avail income tax exemptions under the Income Tax Act, 1961. The exemptions include tax exemption on the income generated from the charitable or non-profit activities of the company. However, it is important to note that certain conditions and restrictions apply to qualify for these exemptions.
• Exemption on Donations: Donations received by Section 8 Companies for charitable purposes are also eligible for tax exemptions. The donors can claim deductions under Section 80G of the Income Tax Act for the amount donated to the company, subject to certain conditions and limits specified by the Act.
• Accumulation of Income: Section 8 Companies can accumulate income for future use without attracting tax liability. They can set aside a certain portion of their income for specific purposes or for building reserves, provided it is in line with the conditions specified under the Income Tax Act.
• GST Exemptions: Section 8 Companies engaged in charitable activities may be eligible for certain exemptions or concessions under the Goods and Services Tax (GST) regime. These exemptions can vary based on the specific nature of the activities carried out by the company and the applicable GST rules and notifications.
• Compliance and Reporting: Section 8 Companies are required to comply with various reporting and compliance requirements. They need to maintain proper books of accounts, file income tax returns, and adhere to applicable accounting standards and regulations. Non-compliance can result in penalties or loss of tax benefits.

Documents Required

Procedure

Procedure for Section 8 Company Registration:
• Obtain DSC and DIN: The first step is to obtain Digital Signature Certificates (DSC) and Director Identification Numbers (DIN) for proposed directors of the company.
• Name Approval: Apply for name availability of the Section 8 Company through the RUN (Reserve Unique Name) service on the MCA (Ministry of Corporate Affairs) portal.
• Incorporation: Prepare the necessary documents, including the Memorandum of Association (MOA) and Articles of Association (AOA), and file the incorporation application with the Registrar of Companies (ROC) through the Spice+ form.
• License Application: Apply for a license under Section 8 of the Companies Act, 2013, by submitting the required documents to the ROC.
• Certificate of Incorporation: Once the application is processed and approved, the ROC will issue the Certificate of Incorporation, confirming the registration of the Section 8 Company.

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