Incorporation of Section 8 Company

Procedure for Incorporation of Section 8 Company

Online Legal India LogoBy Online Legal India Published On 19 Oct 2022 Updated On 06 Jan 2023 Category Section 8 Company

What is section 8 company incorporation in India?

An NGO may be incorporated under Section 8 of the Companies Act of 2013, as a trust or society under the Societies Act of 1860, or as a Section 8 company under the Trust Act of 1882. The process of incorporating an NGO under the Companies Act of 2013 is section 8 company incorporation.
 

A section 8 company can be put up to promote things like religion, charity, social research, sports, education, the arts, science, commerce, technology, and environmental protection. After completing the registration process successfully, a Section 8 Company is permitted to operate anywhere in India.
 

Benefits of section 8 company incorporation

Being an NPO or non-profit organisation does not exclude a business from turning a profit or generating revenue. It merely indicates that the business may generate revenue, but the promoters are not to share in such earnings. The promoters cannot receive a share of the earnings. The object must be promoted with all earnings.
 

However, under section 8 of the Companies Act 2013, some exclusions and benefits have been made available for both "NGOs and NPO." Such companies are also eligible for a number of tax benefits. Even the donors who make contributions to the Section 8 Company may claim a tax exemption for their contributions.
 

  • Unique legal identity: Section 8 Company is a distinct legal personality from its members. The Company is continuously existing. Additionally, they have more flexibility and well-organized operations.
     
  • Zero stamp duty: Unlike other types of business structures, a Section 8 Company is not required to pay stamp duty on the MOA (Memorandum of Association) and AOA (Articles of Association) of a private or public limited company.
     
  • No minimum capital need: In India, there is no minimum capital requirement for a Section 8 company. Additionally, the capital structure can be changed at any time to meet the needs of the company's expansion. This suggests that it may be established without the need for share capital. Later, members of the public and donors may contribute the money required for carrying out business activities in the form of donations and/or subscriptions.
     
  • Name: The words "Public Limited or Private Limited" are not necessary to appear after the section 8 company's legal name. Such titles as "Association, Society, Council, Club, Charities, Foundation, Academy, Institute, Organisation, and Federation" are acceptable for registration.
     
  • CARO: This sort of company is not subject to the Auditor's Report Order or CARO.
     
  • Tax benefits: Numerous tax advantages are given to section 8 companies in India.
     
  • Credibility: Section 8 Companies are more reliable than all other kinds of nonprofit institutions. They are subject to stringent regulation and are governed by the Companies Act. For instance, the "MOA and AOA" cannot be changed at any point or circumstance, nor is there a requirement for a necessary annual audit. These businesses are governed by rules that govern how they manage their profits and losses.
     
  • Exemption to the donors: Tax exemptions under Sections 12A and 80G of the Income Tax Act are available to anyone who donates to Section 8 companies.
     
  • Membership: A registered partnership firm has the option to join as an individual and earn a directorship.
     

Section 8 company incorporation eligibility criteria

The following are the requirements for a section 8 company incorporation:
 

  • To register a Section-8 firm in India, you must be an individual, HUF, or limited company.
  • Any two or more individuals who will serve as the company's shareholders or directors must adhere to all the rules and regulations outlined in section 8 company incorporation.
  • A resident of India must make up at least one of the directors. However, a corporation may join a company that is registered under this section.
  • Sports, social welfare, the growth of science and the arts, education, and financial aid to low-income people should all be priorities.
  • The surplus created must only be applied to achieving the section 8 company's main goal.
  • The company's founders, members, and directors are not eligible to receive any compensation in cash or in kind.
  • There should be no direct or indirect distribution of profits to the company's directors and members.
  • The business should have a defined three-year project plan and vision.
     

Required documents for section 8 company incorporation

The following papers must be submitted in order to register a section 8 company:
 

  • PAN cards for shareholders and directors.
  • The Aadhaar Card.
  • most recent bank statement
  • Electricity or telephone bills.
  • Passport, driver's licence, or voter identification.
  • a passport-sized photo of each shareholder and director.
  • If the property is being rented out as the registered office, a copy of the rental agreement is needed.
     

Process of section 8 company incorporation in India

The procedure for setting up a section 8 corporation in India is as follows:

  1. Prepare DSC and file name approval

DSC preparation is the first step in the section 8 company incorporation process. As soon as you can, apply for a Digital Signature Certificate (DSC). Words like Foundation, Society, Association, Council, Club, Charities, Academy, Organisation, Federation, Institute, Chamber of Commerce, Development, and many others should be used in Section 8 corporations.

  1. Filing of section 8 incorporation forms on the MCA portal

We will proceed to file the section 8 company incorporation application with the necessary documentation with ROC after getting approval from the regional director. Once the ROC has received all clarifications, it will issue a Certificate of Incorporation and a Company Identification Number (CIN). This would be done in accordance with SPICE plus's (Spice +) standards.

  1. MoA and AoA file submission

You must write the Memorandum of Association (MoA) and Articles of Association (AoA) after receiving the License in order to submit section 8 company incorporation applications.

  1. PAN, TAN and Bank Account

When applying for section 8 company incorporation in India, you must have your PAN, TAN, and bank account prepared.

 

In India, section 8 company incorporation is in a league of its own. It is a non-profit association that works in social services for the benefit of the community and the nation.
 

The process for registering a corporation under Section 8 is as follows:

  1. Prepare DSC and file Name Approval

DSC preparation is the first step in the section 8 company incorporation process. As soon as you can, apply for a Digital Signature Certificate (DSC).
 

Words like Foundation, Society, Association, Council, Club, Charities, Academy, Organisation, Federation, Institute, Chamber of Commerce, Development, and many others should be used in Section 8 corporations.

  1. Apply for a section 8 company registration license from Regional Director, MCA (INC-12)

We will request a Section 8 company registration licence from the Regional Director after the Name has been approved.
 

The regional director will examine the goals and strategies and will approve the registration of the Section 8 Company. RD typically issues a licence to operate as a section 8 corporation in 15 days.

  1. Filing of section 8 incorporation forms on the MCA portal

We will proceed to file the section 8 company incorporation application with the necessary documentation with ROC after getting approval from the regional director.
 

Once the ROC has received all clarifications, it will issue a Certificate of Incorporation and a Company Identification Number (CIN).

  1. MoA and AoA file submission

You must write the Memorandum of Association (MoA) and Articles of Association (AoA) after receiving the License in order to submit section 8 company registration applications.
 

The MoA, the regulations, and the bylaws will all include information about the company's object, and the AoA will also include the bylaws.

  1. PAN, TAN and Bank Account

When applying for Section-8 Company incorporation in India, you must have your PAN, TAN, and bank account prepared.
 

Section 8 company incorporation fee in India

The following are the registration costs for Section 8 company incorporation:
 

  • DSC & DIN – Rs. 3000
  • Company Name Reservation – Rs. 1000
  • MoA& AoA & Government Fees & Incorporation fees - Rs. 6000-8000
  • Notary and Stamps – Rs. 2000
  • Professional Fees- Rs. 8000-10000
     

Section 8 company incorporation requirements and compliances in India

  1. Minimum requirement

A Section 8 Company is a business that the Ministry of Corporate Affairs will incorporate. It must be incorporated with a minimum of two directors and two members.
 

The minimum share capital needed to register a section 8 corporation is not specified.

  1. Charitable object

Companies under Section 8 must be organised with charitable purposes in mind. A section 8 company's earnings cannot be divided among its shareholders.
 

It will either be reinvested in the company or used for a philanthropic purpose, thereby advancing its fundamental goals.

  1. Management Team

The Board of Directors of Section 8 Companies are in charge of running the organisation in accordance with the MoA and AoA of the Section 8 Company, as opposed to other trusts that are run by the Trustees in accordance with a Trust Deed.

  1. Regulated Under the Companies Act, 2013

The Companies Act of 2013's laws and regulations must be followed by Section 8 companies as well. Keeping up with the book of accounts and filing returns as needed.

  1. Income tax

The Income Tax Act's regulations must be followed by a firm.

  1. GST Registration

Everyone who engages in the business of delivering goods and services with annual gross revenue of above Rs. 40 lakhs is required to register for GST.

 

Why Online Legal India?

As you can see, the section 8 incorporation process for companies comprises a number of challenging processes and calls for proper information. Feel free to use Oline Legal India has top-notch services if you wish to avoid all those hassles.
 

An established professional firm with a ten-year history in the licencing system is Online Legal India. We aim to offer our valued clients the most value for their money by providing industry-leading licencing services and comprehensive support.
 

Join Online Legal India today because we:
 

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