Section 8 company under Companies Act, 2013 or Section 25 under Companies Act, 1956 came into existence with the sole purpose of encouraging companies working towards the upliftment of sports, education, arts, social welfare, religion, environment or any such matter that promotes the charity. The profit earned by the company should only be used to promote said objectives and no part of profit is to be distributed amongst the members of the group. Company registered under this act is more or less similar to trusts working for the upliftment of the society.
However, Section 8 company has more advantages as compared to the trusts as the former comes under the Central Government’s Ministry of Corporate Affairs whereas the latter comes under State Government regulations.
- The company must fall under the Companies Act, 2013. Registration process is similar to that of Private Limited Registration in India.
- Minimum two or more directors required for this creation and out of which one must have Indian citizenship and another can be a foreign national.
- Profits of such company is solely being used for charity purpose.
- The company where no amount of dividend or profit is being shared by the members of the group.
- All important registration certificates required to run this company, E.g. if your company is working towards food security then FSSAI registration is mandatory in this model.
- Director’s personal documents such as PAN, Aadhar, Driving License, Passport, etc.
- Unique name of the process & MOA/AOA should be drafted for objectives of the organisation.
- The documents of the company vesting in the company’s name mentioning the rules and regulation along with the statement of purpose.
- The documents clearly stating all the bye-laws related to closure and dissolution. It must clearly state that after settling all the debts and liabilities, the rest of the funds will not be distributed amongst the members of the group. The funds must immediately be transferred to some other company operating under Section 8 under Companies Act 2013.
If an NGO is registered under 80G then the donor can seek tax exemption on their income tax. It is a kind of certificate issued by commissioner to NGO’s who are actually working for the society. By verifying many documents & activities of NGO, commissioner issues this certificate. Here are the benefits of registering under the same:
- Deduction from taxable income for donors if he/she donated to registered NGOs who have 80G Certificates.
- Such benefit can attract more donors that in turn can help to run NGO in a better way.
These exemptions can only be availed by charitable or religious trusts, societies and Section 8 companies. No family or private trust can avail such exemption.
If a Section 8 Co. is registered under 12A then company can seek tax exemption on their income tax during the year. It is a one-time registration issued by Income tax Commissioner of zonal area. It is a very crucial document if you are planning for Non-Profit NGO in India.
Here are some of the benefits of 12A registration:
- Complete Income Tax exemption for almost lifetime of a Non-Profit NGO
- It also helps in taking FCRA Approval or Foreign fundings.
- It helps in taking grants from Government and other alike bodies.
Registration process of 12A Approval for Section 8 Company
- Form 10A has to be filled.
- Below mentioned documents needs to be attached with duly filled 10A:
- Registration certificate of NGO.
- PAN Card of NGO.
- Name, Address and PAN details of the members of the trust.
- Complete Memorandum of Association.
- NOC from the landlord, if applicable
- Proof of welfare activities carried out in the last 3 years.
- List of donors along with their PAN card details.
- Section 8 Company can apply for both (80G & 12A) exemptions immediately after the NGO registration. One can either file these exemptions together or else can file separately as well. Both the applications must be submitted to Income tax Commissioner who has jurisdiction over your NGO.
- It is a one-time process and then Commissioner of income tax reviews the same thoroughly. He may ask for additional documents or information to complete the formalities. The process takes around 3 to 4 months.
- Commissioner has the power to reject the application over non-satisfaction of documents, thus we recommend seeking the expert services provided by our professionals to ensure that you avail comprehensive tax exemptions without any delay.
- It is created for the benefits of society at large; Funds generated by the company is solely for public cause. One can’t create this model for personal benefits.
- Board of Directors are the controlling authority of Section 8 Co. and this model can take almost advantages of a Public Limited Company.
- Its registration is easy and all registration formats will work under e-filing options. Hence, it’s the most transparent registration option of creating a NGO In India.
- Section 8 Company has to comply all the formalities of ROC & its annual filings. Also, Income Tax guidelines, Auditing & Book keeping of accounts is mandatory. Company must maintain Register for Donation, Board Resolutions, Minutes and Members Register annually.
- Trust Registration & Society Registrations are the other options for starting an NGO In India.
- There is no maximum limit of members in the section 8 Company.
- Section 8 Company can buy and sell property by its name but with the guidelines of Companies Act 2013.
- We help you in the entire process of Section 8 company registration with assurance of hassle-free proceedings.
- Having us on board for your company’s registration will help you to complete all the formalities in much lesser time.
- We will assist you on FCRA Approval from day 1, as it is the most crucial approval for Foreign fundings and grants.