What do you mean by Section 8 company registration in India?
There are three ways to register an NGO, first is registering it as a Section 8 company under the Companies Act 2013, second is registering as a trust under the Trust Act 1882 and the third is registering it as a society under the Societies Act 1860.
In order to promote the Art, Science, Commerce, Technology, Sports, Education, Social Research, Social Welfare, Religion, Charity and Protection of Environment etc, section 8 companies are registered. After successful obtaining registration, such companies can perform their activities anywhere in the country.
Which Documents are required for obtaining registration of Section 8 Company in India?
In order to obtain registration of Section 8 company, following documents are required:
- Director’s and Shareholder’s Permanent Account Number (PAN) and Aadhaar card
- Latest Bank Statement
- Utility bills such as Telephone Bill or Electricity Bill or water bills
- Passport or Driving license or Voter Identity Card
- All the directors and shareholders are required to submit the Passport size photograph.
- Where the property is on rent, Copy of the Rental agreement of the registered office would be required.
What are the advantages of registering Section 8 Company in India?
There are various advantages while registering the Non Government companies (NGO) or Nonprofit Companies (NPO) which are as follow:
Capital requirement: No minimum capital is required for registering NGO as a Section 8 Company in India.
Benefits related to tax: Numerous tax benefits can availed after registering as a Section 8 company in India.
No Stamp Duty: Incorporation of Section 8 Company does not required stamp duty as Memorandum of Association (MOA) and Article of Association (AOA) of the private limited company does not allow the same.
Separate Legal Identity: The concept of Separate Legal Entity is followed in Section 8 Company as a result Members and the Section 8 Company have the distinct identity from each other.
Credibility: The credibility of Section 8 Company is more than any other form of organization as a result such companies are required to compulsory conduct audit every year under the strict provision of the Companies Act.
Exemption to the donators: Donors are eligible to claim exemption under Section 80G, if the Section 8 Company has obtained the registration under section 80G.
Who all are eligible to obtain registration of Section 8 company?
Following persons are eligible to obtain registration under Section 8 Company:
- Such company can be commenced by an Individual or HUF or limited Company.
- All the requirements and compliances of the Section 8 Company registration are required to be fulfilled by the shareholders and directors.
- 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.
- Promotion of sports, social welfare, advancement of science and art, providing education and financial assistance to lower section of the society should be the objective of such companies.
- The incomes and revenues of the company must be utilized for the fulfillment of the objective of the company not for any other purpose.
- Any remuneration whether in form of cash or kind cannot be withdrawn by the any of the Founders, members, and directors of the company.
- The profit of the company shall not be distributed to its members and directors directly or indirectly.
- Clear and standardized project plan as well as vision should be defined by the company for the next three years.
What is the procedure to obtain Section 8 Company registration in India?
Section 8 Company is a non - profit organisation established with the aim of doing social work for the welfare of the section of the society.
Section 8 company registration procedure is as follows-
Preparation of Digital Signature Certificate (DSC) and filing for Approval of Name
Applying for Digital Signature Certificate (DSC) is the first step for registering the Section 8 Company.
Words like Foundation, Society, Association, Council, Club, charities, Academy, organisation, Federation, Institute, Chamber of Commerce, Development and many more should be included at the end of the Section 8 companies name.
Applying for license of Section 8 Company registration from Regional Director, MCA in Form INC-12
Application shall be sent for obtaining the license from regional Director after the name of the company is approved.
The objectives, plans of the company shall be reviewed by the regional director and after the review process, a permit shall be granted by the regional director for Section 8 Company registration. It generally takes 15 days by the regional director to issue a license for the operation of the company as a Section 8 Company.
Filing of Section 8 Incorporation Forms on Ministry of Corporate Affairs (MCA) Portal
Application for Section 8 Company shall be filed along with the necessary documents with the ROC after obtaining approval from the regional director
A Certificate of Incorporation in which Company Identification Number (CIN) would be mentioned shall be issued by the ROC after all the clarification of the documents.
Submission of Memorandum of Association (MOA) and Article of Association (AOA) File
In order to file Section 8 Company registration applications, drafting of Memorandum of Association (MOA) and Article of Association (AOA) shall be done.
Rules as well as the Object of the company shall be mentioned in the Memorandum of Association (MOA) and Article of Association (AOA) shall contain the by-laws of the company.
Permanent Account Number (PAN), Tax Deduction Account Number (TAN) and Bank Account
Permanent Account Number (PAN), Tax Deduction Number (TAN) and bank account are required for obtaining the registration of Section 8 Company.
How much cost is involved in obtaining registration of Section 8 Company in India?
The fees for registration is mentioned under:
- Digital Signature Certificate (DSC) & Director Identification Number (DIN)– INR 3000
- Reservation of Company Name – INR 1000
- Memorandum of Association (MOA) & Article of Association (AOA) & Government Fees & Incorporation fees - INR 6000-8000*
- Notary and Stamps – INR 2000
- Professional Fees- INR 8000-10000
What are the Requirement and Compliances to be followed under Section- 8 Company Registration?
Minimum 2 directors and 2 members are required to incorporate the company under section 8 by the Ministry of Corporate Affairs.
Under section 8 company, no minimum share capital is required.
The core objective of the Section 8 Company shall be non profit. The profit of the company shall not be distributed to its members and directors directly or indirectly.
Such income shall be utilized for the promotion of the objective of the organization or shall be reinvested in the business.
Board of the Director governs the Section 8 Companies in india as per the Memorandum of Association (MOA) and Article of Association (AOA) of the Section 8 Company .
Regulated Under Companies Act, 2013
Rules and regulation as framed under the Companies Act 2013 are required to be followed by such Section 8 company such as Maintaining Book of accounts, filing of returns as and when required.
Provisions of Income Tax Act shall also be complied by such Section 8 Company in India.
Registration under Goods and Services Tax (GST)
GST Registration shall be required by such company providing goods and services in case the aggregate turnover of the company exceeds Rs.40 lakhs.
What Annual Compliances to be followed for Section 8 companies as per the Companies Act 2013?
The annual compliances of section 8 company are just like the other companies.
- Two board meetings must be organized in a year.
- Books of Accounts Maintenance
- Financial Statements preparation
- Compulsory conduction of Audit
- Filing of Income Tax Return
- Form AOC 4 for filing of financial statements
- Other compliance such filing of annual return every year along with the other e- filing forms like MGT 7.
- Additional compliances to fulfill the registration like 12AA, 80G etc.
How India Financial will help you to get Section 8 company registration
Frequently Asked Questions about Section 8 Company Registration
Following are the purpose of the Section 8 Company Registration in India
- Environment protection
- Blood bank
- Other objects for general public utility.
Yes, obtaining approval from central government is mandatory while registering the Section 8 Company
Registration of Section 8 Company is costly than trust or society registration.
While appointing the auditor, no central government approval is required and the auditor can be appointed by the Board of Directors within 3o days of Section 8 company registration.
Disadvantages of Section 8 Company registration are mentioned below:
- As approval from Central Government is required which makes the registration process of Section 8 Company very complex.
- Compliance cost of Section 8 Company is also very high as compared to any other trust or society
- In addition to the above, penalty provisions are also harsh under section 8 company.
- Under Income tax Act, Section 12AA
- Section 80G for Donators of the Section 8 Company
- Registration of FCRA
The cost of obtaining registration as a Section 8 Company varies from company to company.
No such provision is framed for minimum number of member under section 8 company registration.