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.
Process for Registering a Section 8 Company in India
The following process can be utilised for registering a section 8 company in India:
- 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.
- 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). This would be carried out as per the requirements under SPICE plus (Spice +)
- 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.
- 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 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-
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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.
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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.
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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).
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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.
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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
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Minimum Requirement
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.
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Charitable object
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.
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Management Team
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.
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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.
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Income tax
A company has to follow the provisions of Income Tax Act.
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GST Registration
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.
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