Easily register a Section-8 company.

How to register a non profit company?

A Section 8 company, also known as a not-for-profit company, is a popular choice among individuals and organizations looking to promote social welfare. These companies are incorporated under the Companies Act, 2013, and are primarily formed for charitable, educational, religious, or scientific purposes. By registering a Section 8 company, entrepreneurs can contribute to social welfare while enjoying tax exemptions and various other benefits. In this article, we will guide you through the process of registering a Section 8 company in India and discuss its advantages.

If you intend to undertake a non for profit activity for social welfare or social cause, a Section 8 NGO Company is the most suitable legal structure for you. It is widely regarded as an NGO/NPO non governmental organization/ non profit organization. It attracts donations for social causes.

You can start NGOs in India by obtaining registration under any of the following categories:

• Society- under Societies Registration Act-(Central government)
• Trust -under Indian Trusts Act-(State government)
• Company name approval.
• Section 8 Company -under Companies Act-(central government)

A Non-profit company is known as a section 8 company, and it has various advantages compared to a trust or society, like improved recognition and better legal standing. Section 8 companies also have higher credibility amongst donors, international organizations, government departments, and other stakeholders.

Purpose of NGO – Section 8 company

The main purpose of establishing a section 8 company is to promote non-profit/ charitable activities such as commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment or any other object. The profits and income of the company are applied towards promoting the objectives of the company and are not allowed to distribute dividends to its shareholders.

The incorporation process of a section 8 company is similar to that of a private limited company registration. However, there is an additional requirement of obtaining an NGO license from ROC under section 8 of the companies act, 2013.

A Section 8 company is registered in 5 easy steps.

• Procure digital signature of directors
• Obtain DIN number of subscribers/directors
• Company name approval
• Obtaining NGO license
• Incorporation certificate

Features of Section 8 Company

• Name: Section 8 companies can be registered as business names followed by association, foundation, society, council, club, charities, institute, academy, organization, federation, chamber of commerce, development and more.

For example: Vareen marine foundation

• Profits: In a Section 8 company, the profits can be used only for the charitable/ non profit purposes mentioned in the MOA. All income and profits, if any, should be utilized to promote the objectives of the company. It is not allowed to distribute profits or assets to its members.
• Management: Trusts are managed by trustees as per a trust deed. However, a Section 8 company does not have the concept of trustees. Section 8 companies are managed by the board of directors based on the MOA and AOA draft of the section 8 company.
• Transferability: The control and ownership of a section 8 company can be easily transferred from one person to another.
• No Minimum Capital: There is no requirement for a minimum paid-up capital in the case of a section 8 company registration.

Tax applicability

There is a general misconception that non -profit companies need not have to pay tax as they work for the public welfare or social cause. But this is not true. A non -profit company, like any other legal entity, is liable to pay tax

In order to get tax exemption, a non -profit company can acquire a 12A certificate from the Income Tax Department.

Upon acquiring a 12A certificate, a non -profit company is exempted from paying income tax for the entire lifetime on its surplus income. Act.

Whereas the 80G certificate allows donors( an individual or an entity) making donations to an 80G certified non -profit company to avail deduction. Thus, such a deduction can be claimed by the donors under section 80G of the Income Tax Act.