Section 8 Company is a type of entity which Is incorporated for the promotion of commerce, science, education, art, research, sports, religion, social welfare, environment protection, charity, protection of environment or any such other objects The sole objective of Section 8 companies is to promote objects and none of the members shall be paid an income or a dividend.
Section 8 company is suitable for non-profit objective and it may a private limited or a public limited company. As per law in case the proposed section 8 company is a private limited then minimum two promoters is required, however in case it is a public limited section 8 company then minimum 7 person must be the promoters of the company. A ‘Section 8 Company’ is eligible for certain exemptions from provisions of law and a concessional rate of fees. The process of incorporation of a section 8 company is similar to that of any other company registration in India with an additional requirement of seeking a prior license from the central government under section 8 of the companies act, 2013.
1. No Profit Motive: The companies registered under section 8 of the companies act, cannot distribute profits or assets to its members.
2. No minimum Capital: There is no minimum level of capital prescribed, hence a section 8 company can be incorporated with the capital as required by it.
3. Voting Rights: The voting rights to the members of section 8 company are based on the number of shares, similar to that of any other company.
4. One Resident Director: One director of the company must be resident in India. A person is said to be a resident when he stays in India for at least 182 days in the FY.
1. No Minimum Capital Requirement
2. Income Tax Exemption
3. Best form to start your NGO/NPO
4. Can accept Donations
The Services which are included in our package are as Follows:
✅ Digital Signatures of Directors
✅ DIN of Directors
✅Filing of Spice form
✅Issue of Incorporation Certificate along with PAN and TAN
✅Memorandum of Association
✅Articles of Association
✅Provisional PF ESI Registration
✅GST Registration
✅MSME Registration
1. Pan Card of all Directors and Subscribers
2. Identity Proof i.e. Voter Id Card/ Driving License/ Aadhar Card/ Passport of all Directors and Subscribers
3. Address Proof i.e. Bank Statement, Mobile bill, Telephone bill of all Directors and Subscribers
4. Passport Size Photographs of all Directors and Subscribers
5. Current Electric Bill/ Utility Bill as Registered Office Proof
6. Rent Agreement if Applicable
Step -1 Arrange all Required Documents:
The first step is to arrange all the documents and send the same over the email / WhatsApp to us. Once all the Documents are Received, we will Start the Further Process.
Step -2 DSC and Name Availability:
The Next Step is to Start the Further Process of Digital Signature and Checking the Name availability.
Step-3 Preparation of Documents:
The Next Step is Preparation of Documents to be Submitted at Department.
Step-4 Filing of Spice Form:
The Next Step is Submission of Spice 32 Form at Department.
Only registering a section 8 company does not result into income tax exemption and further exemption to the donators. Rather section 8 company is the first step to claim the income tax exemption. There are basically two types of income Tax exemptions which are as follows:
1. Exemption to Section 8 Company from Income Tax: This exemption is claimed under Section 12AA of the Income tax Act, 1961. As per section 12AA, an application is filed to the Income tax commissioner along with the necessary supporting documents. If Income tax commissioner is satisfied, then he shall grant the tax exemption to the company.
2. - Exemption to donators under Income tax: This exemption is claimed by donators under section 80G. However,the donators is only eligible to take tax exemption if the section 8 company is registered under section 80G. This exemption can be filed along with section 12 exemption or anytime after that.
1. Section 8 company are not allowed to raise funds by way of deposits but they can accept donations from the: general public. These are the ways in which section 8 company can raise funding
1. Foreign Donations: Foreign donations are allowed only when FCRA registration has been taken. FCRA license can only be applied after three years from the date of registration. However, if it is really urgent to receive foreign donations, then you may apply for prior permission from commissioner.
2. Equity Funding: Section 8 company can also raise funding by issuing new equity shares at a higher value.
3. Domestic donations: There is no restriction on the domestic donations, however a proper check must be kept in order to avoid the money laundering cases.
| SR.No | A Section 8 Company Can | A Section 8 Company Cannot |
|---|---|---|
| 1. | Can do any activity which is done without any profit motive. | Cannot take profit from the company directly, but can take in the form of salary, official expenses etc. |
| 2. | Can open branches as there is no specific restriction, however advised to open in limited numbers. | Run with profit motive otherwise all the existing tax exemption shall be withdrawn. |
| 3. | Give salaries to members/director for their services. | Cannot take deposits from general public. |
Q1. For which purposes the section 8 company can be registered?
Section 8 company can be registered for many social factors like:
• Education
• Poverty
• Disease
• Blood bank
• Environment protection
• Other objects for general public utility.
Q2. Can a Section 8 Company be Converted into Private Limited Company?
Yes. A Section 8 company can be converted into a private limited company after taking approval from ROC.
Q3. How to appoint auditor under section 8 Company?
Auditor under section 8 company is being appointed within 30 days by the board of Directors and no Central Government approval is required.
Q4. Can Section 8 Company Raise Funding?
Yes. FDI (Foreign Direct Investment is allowed, subject to the compliance of FEMA Regulations. However, the same is considered as a Foreign Contribution under FCRA, it can be infused only with prior permission/registration from the central government.
Q5. Can the Promoters of Section 8 Company be Employees as well?
No. A promoter of NPOs cannot be employed as a paid employee of the Company.