A Section-8 Company is a type of non-profit organization that is registered under Section 8 of the Companies Act, 2013 in India. The main objective of a Section-8 Company is to promote social welfare, charity, education, art, science, religion, or any other useful purpose. Unlike other companies, a Section-8 Company does not operate for profit or gain.
Instead, any income generated is used to promote its objectives and not distributed amongst its members. This makes it an ideal structure for organizations such as charities, non-governmental organizations (NGOs), and educational institutions.
To register a Section-8 Company, the application must be submitted to the Registrar of Companies (ROC) with the necessary documents and fees.
The process involves obtaining a Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors of the company.
Once the DSC and DIN are obtained, the company can file its application with the ROC. The application must include the proposed name of the company, its objectives, the names and addresses of its proposed directors, and other relevant details.
The ROC will verify the application and may request additional information or documents if required. If the application is approved, the ROC will issue a certificate of incorporation, and the Section-8 Company can start its operations. It is important to note that a Section-8 Company cannot alter its objectives once they are registered, and any changes must be approved by the ROC.
As a Section-8 Company operates for charitable or social purposes, it is entitled to certain tax benefits and exemptions. For example, donations made to a Section-8 Company are eligible for tax deductions under Section 80G of the Income Tax Act, and the company itself is exempt from paying income tax on its income.
A Section 8 company has many benefits over other types of companies or organizations. Let’s discuss some benefits of Section 8 company:
A Section 8 company does not require a minimum paid-up share capital like other companies. It can be started with any amount of capital that is sufficient for its operations.
Section 8 Companies are exempt from paying income tax on their profits. This is a significant benefit, as it can save the company a lot of money. Section 8 Companies are considered separate legal entities from their members.
This means that the members are not personally liable for the debts of the company. Section 8 Companies are established for charitable purposes and are not intended to make a profit for their members. This makes them suitable for organizations with a philanthropic mission.
These companies are required to maintain proper books of accounts and undergo annual audits, ensuring transparency in financial transactions. A Section 8 company has less compliance burden than other companies.
It does not have to comply with many provisions of the Companies Act, such as holding annual general meetings, filing annual returns, maintaining statutory registers, etc.
Section 8 Companies offer several benefits to non-profit organizations. They are exempt from income tax, have no minimum capital requirement, and are considered separate legal entities from their members. Section 8 Companies are also eligible for government grants and foreign contributions.
As we all know, Section 8 companies, aligned with the principles of Digital India, find a seamless avenue through the Digital Seva Portal. This digital integration not only streamlines administrative processes but also exemplifies the transformative power of the Digital India initiative. Section 8 entities, leveraging the Digital India Portal, signify a progressive step towards a more accessible and efficient corporate landscape, fostering a digitally empowered business environment.