What is Section 8 Company Registration in India?
An NGO can be registered as a Section 8 company under the Companies Act 2013 or as a trust under the Trust Act 1882 or as a society under the Societies Act 1860.Section 8 Company Registration is the process of incorporation of an NGO under the Companies Act 2013.
A section 8 Company can be registered for promoting Art, Science, Commerce, Technology, Sports, Education, Social Research, Social Welfare, Religion, Charity and Protection of Environment etc. A Section 8 Company can work anywhere in India after succesful completion of the registration process.
Documents for Section 8 Company Registration
Following documents are required for Section 8 Company registration:
- 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
Benefits of Section 8 Company Registration
There are certain advantages of registering an NGO or NPO under Section 8 of Companies Act 2013. Some of them are as follows:
No minimum capital: There is no minimum capital requirement for a Section 8 Company Registration in India.
Tax Benefits: There are numerous tax benefits under the Section 8 Company Registration in India.
No Stamp Duty: No stamp duty is imposed on the incorporation of Section 8 Company in India as it is against the provision of the payment of stamp duty on the MoA and AoA of the private limited company.
Separate Legal Identity: Section 8 Company registration has a separate legal entity. It acquires a distinct legal identity from its members.
Credibility: Section 8 Company has more credibility than any other form of a charitable organisation. It is under the strict provision of the Companies Act which requires a mandatory audit every year.
Exemption to the donators: Under Section 80G, the exemption is granted to the donators if the section 8 company is registered under section 80G.
Section 8 Company Registration Eligibility Criteria
Eligibility criteria for a Section 8 company registration are as follows:
- An Individual or HUF or limited Company is eligible to start a Section- 8 company registration in India.
- Two or more person who will act as a shareholder or Director of the company should fulfill all the requirements and compliances of the Section 8 Company registration.
- At least one of the directors shall be a resident of India. However, a firm may be a member of the company registered under this section.
- The objective should be the promotion of sports, social welfare, the advancement of science and art, education and financial assistance to lower income groups.
- The surplus generated must be used for meeting the principal objective of the section 8 company only.
- Founders, members, and directors of the company cannot draw any remuneration in any form of cash or kind.
- No profit should be distributed among the members and director of the company directly or indirectly
- The company should have the clear vision and project plan for the next three years.
How to apply for Section 8 Company registration in India?
File Name Approval
Apply for registration license
Filing of Incorporation Forms
Submission of MoA & AoA
Get Pan, Tan and Bank account
Section 8 company registration in India is a class by itself. It is a non- profit organisation engaged in the social work for the welfare of the society and the country.
Section 8 company registration procedure is as follows-
Prepare DSC and file Name Approval
The very first step for Section 8 company registration is to prepare DSC. Apply for Digital Signature Certificate (DSC) as soon as possible.
Section 8 companies should contain words like Foundation, Society, Association, Council, Club, charities, Academy, organisation, Federation, Institute, Chamber of Commerce, Development and many more.
Apply for Section 8 Company registration license from Regional Director, MCA (INC-12)
After Name approval, we will apply for Section 8 company registration license from Regional director.
The regional director will review the objectives, plans and will grant a permit for Section 8 Company registration. RD usually takes 15 days to issue a license to operate as a section 8 company.
Filing of Section 8 Incorporation Forms on MCA Portal
After getting approval from the regional director, we will proceed to file the section 8 company registration application with the requisite documents before ROC.
Once all clarifications are provided to ROC, the ROC shall issue a Certificate of Incorporation along with a Company Identification Number (CIN).
MoA and AoA file submission
Once you get the License, you need to draft the Memorandum of Association (MoA) and Article of Association (AoA) to file section 8 company registration applications.
The Object of the company will be detailed in the MoA and the rules, and the by-laws will be mentioned in the AoA.
PAN, TAN and Bank Account
You must have your PAN, TAN and bank account ready while going for Section- 8 Company registration in India.
Section 8 Company Registration Fee in India
The Registration fees for Section 8 company registration is as follows
- DSC & DIN – 3000
- Company Name Reservation – 1000
- MoA& AoA & Government Fees & Incorporation fees - Rs 6000-8000*
- Notary and Stamps – 2000
- Professional Fees- 8000-10000
Requirement and Compliances Under Section- 8 Company Registration in India
A Section 8 Company is a company to be incorporated by the Ministry of Corporate Affairs. Minimum two directors and two members are required to incorporate it.
No minimum share capital is required for section 8 company registration.
Section 8 companies are required to be incorporated with non-profit objectives. Any profit earned through a section 8 company will not be distributed among its members.
It will either be reinvested in the business or utilized with an objective of furtherance of its main objects, i.e. charitable purpose.
Unlike other Trusts which are managed by the Trustees as per a Trust Deed, section 8 Companies are governed by the Board of the Director as per the MoA and AoA of the Section 8 Company.
Regulated Under Companies Act, 2013
Section 8 company also needs to follow the rules and regulation that are prescribed under the Companies Act, 2013. Maintaining Book of accounts, filing of returns as and when required.
A company has to follow the provisions of Income Tax Act.
Every person or company who is indulged into providing goods and services whose aggregate turnover crosses Rs.40 lakhs in a year requires GST Registration.
Annual Compliances for Section 8 companies as per the Companies Act 2013
The annual compliances of section 8 company are just like the other companies.
- Conduction of minimum of two board meetings in a year.
- Maintenance of Books of Accounts
- Preparation of Financial Statements
- Mandatory Audit
- Income tax return filing
- Filing of financial statements in form AOC 4
- An annual return is to be filed every year with other e- filing forms like MGT 7.
- Additional compliances to fulfil the registration like 12AA, 80G etc.