Section 8 Company Registration is a process under the Companies Act, 2013, which allows organizations to operate as non-profit entities. These companies work towards social welfare, education, sports, environmental protection, and similar causes without the intent to distribute profits among their members.
This guide provides a step-by-step approach to Section 8 Company Registration in India, including its benefits, eligibility criteria, required documents, compliance requirements, and tax exemptions.
Section 8 Companies aim to promote:
• Commerce, arts, science, sports, education, research
• Social welfare, religion, charity
• Environmental protection and sustainable development
Unlike traditional businesses, these companies are prohibited from distributing profits to members and must reinvest earnings to further their objectives.
3.1 Legal Recognition
• Governed under the Companies Act, 2013, making them more credible than Trusts and Societies.
3.2 Tax Exemptions
• Eligible for exemptions under Section 12A (Income Tax exemption for NGOs) and Section 80G (tax deduction benefits for donors).
3.3 No Minimum Capital Requirement
• Unlike other companies, Section 8 entities do not need to maintain a minimum paid-up capital.
3.4 No Stamp Duty
• Exempt from paying stamp duty on the Memorandum of Association (MoA) and Articles of Association (AoA).
3.5 Higher Donor Trust
• Due to strict regulations and transparent financial records, these companies gain higher trust from donors and funding agencies.
To register as a Section 8 Company, the organization must fulfill the following conditions:
• At least one Indian resident director.
• Eligible entities: Individuals, Hindu Undivided Families (HUFs), or limited companies.
• The company must intend to promote social welfare activities like education, sports, environmental protection, etc.
• The company must ensure that all profits are used to fulfill its objectives and are not distributed among members.
• The name of the company must include “Association,” “Council,” “Foundation,” “Institute,” “Club,” “Society,” “Federation,” “Charity”, etc.
5.1 Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN)
• The proposed directors must obtain a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for online registration.
5.2 Name Approval
• Submit an application for name reservation through RUN (Reserve Unique Name) form on the MCA (Ministry of Corporate Affairs) portal.
• Ensure the name is unique and does not conflict with existing company names.
5.3 Prepare Required Documents
The following documents are required:
• Memorandum of Association (MoA) & Articles of Association (AoA)
• Director Identification Number (DIN)
• Digital Signature Certificate (DSC)
• ID Proofs (Aadhaar, PAN, Voter ID, Passport, Driving License)
• Address Proof of Registered Office (Electricity bill, rental agreement, etc.)
• Declaration Forms (INC-14 & INC-9)
5.4 Filing Application with Registrar of Companies (ROC)
• Submit SPICe+ (Simplified Proforma for Incorporating a Company Electronically) form on the MCA portal.
• Pay the required government fees online.
5.5 Verification and Approval
• The Registrar of Companies (ROC) verifies the application and, upon approval, issues the Certificate of Incorporation.
• The directors receive Director Identification Number (DIN).
5.6 Obtain PAN and Other Registrations
• Apply for Permanent Account Number (PAN) for tax compliance.
• Register under Goods and Services Tax (GST) if required.
• Apply for Import Export Code (IEC) for international funding.
Section 8 Companies must adhere to strict compliance rules, including:
• Annual Filings: Submission of financial statements and audit reports.
• Income Tax Returns: Filing IT returns under Form ITR-7.
• Board Meetings: At least two meetings per year.
• Maintenance of Books of Accounts.
• Filing of Director KYC (Form DIR-3 KYC).
• Provides income tax exemption for NGOs.
• Ensures that the organization does not have to pay income tax on surplus funds.
• Encourages donations by providing tax deductions for donors.
• Organizations with 80G registration can receive corporate and foreign funding.
Example: Akshaya Patra Foundation
• A registered Section 8 Company that provides mid-day meals to underprivileged children.
• Operates under strict compliance while benefiting from tax exemptions and government support.
9.1 Bureaucratic Hurdles
• Solution: Seek assistance from professional service providers like ReturnFilings.Com.
9.2 Difficulty in Fundraising
• Solution: Obtain 80G certification to attract donations from corporates and individuals.
9.3 Compliance Burdens
• Solution: Hire professional accountants to manage audits and tax filings.
Section 8 company registration / incorporation is ideal for businesses having non-profit motive. However, it comes with increased compliance and regulatory requirements. With expert assistance from Return Filings, you can ensure a smooth registration and compliance process for your Section 8 Company. For professional assistance, reach out to us on email: info@returnfilings.com or on whatsapp: https://wa.me/919910123091.
