These types of NGOs

 Society:

  • A group formed by people sharing a common interest, like culture or education.
  • Managed by a committee or board.
  • Funded by memberships, donations, and grants.
  • Can operate at the State or National level, needing at least 7 members from different states for a National-level Society.

 Trust:

  • Established to manage assets (money, property) for a specific charitable purpose.
  • Governed by a deed outlining asset management by trustees.
  • Examples include scholarship or environmental conservation trusts.

 Section 8 Company:

  • Registered like a private limited company under the Ministry of Corporate Affairs.
  • Focuses on charitable activities for public good.
  • Cannot distribute profits to members; surplus funds must be used for social goals.
  • Relies on donations and grants for funding.

What is Section 8 Company

A Section 8 Company, governed by the Companies Act, 2013, formerly known as a Section 25 Company, is established for charitable purposes. All generated income must be used for these objectives, and members cannot receive dividends. This structured approach enables societal impact and regulatory compliance, offering exclusive licensing.

·  Charitable Purpose:

  • Section 8 Companies are registered with the main goal of serving charitable causes.

·  Income Utilization:

  • All income and profits earned must be used to fulfill these charitable objectives.

·  Dividend Restrictions:

  • Members of the organization cannot receive any dividends, surplus, or profits.

Advantage of Section 8 Company Registration in India

  • Tax Savings: Section 8 companies save significantly on taxes as they're fully exempt from tax on profits when registered under 12A and 80G for charitable purposes.
  • No Minimum Capital: There's no need for a minimum capital investment to start a Section 8 company, making it accessible to various organizations.
  • Lower Registration Costs: Section 8 companies are exempt from stamp duty during registration, reducing initial expenses.
  • Separate Legal Identity: Section 8 companies are seen as separate legal entities, enhancing credibility and independence.
  • Trustworthiness: Their strict adherence to legal rules makes Section 8 companies more reliable than societies and trusts.
  • Name Flexibility: You can choose a name that represents your organization's mission without adding "Section 8" in the title, offering more naming freedom.

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Requirements for Section 8 Company Registration

·  Serving Social Causes: Your organization should aim to benefit society in various areas like education, charity, sports, and environmental protection.

·  Reinvestment of Profits: Any money earned must be used to support social objectives, not given out as dividends to members.

·  Non-Profit Focus: The main aim of a Section 8 Company is to serve social causes, not to distribute profits to its members.

"Essential Legal Requirements for Section 8 Company"

 ·  Number of Directors: There's no specific requirement for the minimum or maximum number of directors in a Section 8 Company.

·  Number of Members: The Ministry of Corporate Affairs sets limits on the number of members based on the company structure.

·  Capital Requirement and Naming:

  • Minimum Capital: No minimum paid-up capital is needed.
  • Naming: Unlike private limited companies, Section 8 NGOs don't have to include "private limited" or "limited" in their name. However, they must include terms like "Foundation," "Forum," "Association," "Federation," "Chamber," "Confederation," "Council," "Electoral Trust," etc., in their name.

 The Requirement Documents Requirement for Section 8 Company Registration

·  Identity Proof (Directors):

  • PAN Card
  • Passport-sized Photo
  • Copy of one of the following for each director & shareholder:
    • Voter ID Card
    • Passport
    • Driving License

·  Address Proof (Directors & Shareholder):

  • Provide one of the following documents (not older than two months) for each director:
    • Latest Bank Statement
    • Electricity Bill
    • Telephone Bill
    • Mobile Bill

·  Registered Office Proof:

  • For Owned Property:
    • Electricity Bill (not older than two months)
    • Copy of Registry Proof or House Tax Receipt
  • For Rented Property:
    • Electricity Bill (not older than two months)
    • Notarized copy of Rent Agreement
    • Original No Objection Certificate (NOC) from the property owner.

 The process for Section 8 Company Registration

·  Step 1: Consultation

  • Call our experts at: 8881-069-069 to check your eligibility and get guidance on document preparation.

·  Step 2: Document Preparation

  • Our experts assist you in obtaining Digital Signature Certificate (DSC), Director Identification Number (DIN), and reserve a unique name.

·  Step 3: Application Submission

  • Our experienced professionals submit your application form on your behalf, handling all the paperwork.

·  Step 4: Certificate Issuance

  • Once approved, the Ministry of Corporate Affairs (MCA) issues a Certificate of Incorporation (INC-16), which is emailed to you for confirmation.

Tax Exemptions and Reliefs of Section 8 Company Registration

A Section 8 company, also known as a non-profit organization (NPO), can offer tax benefits to its donors if it has obtained 12A and 80G registrations. Here’s how it works in simple terms:

1. Tax Exemptions for Donors: Donors who contribute to a Section 8 company can claim tax deductions under Section 80G of the Income Tax Act. This means that the amount donated can be deducted from the donor's taxable income, thereby reducing their overall tax liability.

2. Significance of 12A and 80G Registration :- 12A Registration: This registration exempts the Section 8 company itself from paying income tax on its surplus income. It signifies that the organization is recognized as a legitimate non-profit entity by the Income Tax Department.

   - 80G Registration: This registration allows donors to claim deductions on their donations to the Section 8 company. It enhances the credibility and trustworthiness of the organization in the eyes of potential donors.

These registrations not only benefit the donors by reducing their tax burden but also enhance the transparency and credibility of the Section 8 company. This encourages more individuals and businesses to support its charitable or social causes, knowing that their contributions are eligible for tax benefits under Indian tax laws.

Assent of Section 8 Company Registration

 

1. **Audit & Accounts**:

   - Auditor Appointment (Form ADT-1 : Appoint an auditor within 30 days of incorporation for a 5-year term.

   - Statutory Registers: Maintain registers for members, loans, charges, directors, etc., as per the Companies Act 2013.

   - Board Meetings : Conduct at least one meeting every six months.

   - Annual Audit : Get financial statements audited annually by a Chartered Accountant (CA).

   - Financial Statements (Form AOC-4) : File audited financials within 30 days of the Annual General Meeting (AGM).

 

2. Meetings & Reports :

   - AGM Notice : Provide a minimum of 14 days' notice for general meetings.

   - **Annual General Meeting (AGM)**: Hold within 6 months of the fiscal year-end. The first AGM can be held within 9 months. Subsequent AGMs should not be more than 15 months apart.

   - Board Report : File Form AOC-4, which includes financial statements and annexures.

 

3. Tax & Filings :

   - Income Tax Returns : File by October 31st of each assessment year.

   - Tax Audit (Form 10B) : If applicable (for trusts under Section 12A or applying under Section 10A), file by September 30th.

   - Annual Return (Form MGT-7) : File with the Registrar of Companies (ROC) within 60 days of the AGM, detailing management and shareholder information.

   - DIN KYC: Complete by September 30th for individuals with a Director Identification Number (DIN) allotted by MCA on or before March 31st.





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