Register Section 8 Company (NPO/NGO)
- - Section 8 registration in 25 to 30 days with License.
- - No minimum capital requirement.
- - Best substitute for trust, society registration.
Section 8 Company
Know what is Section 8 Company and how it is Registered.
What is a Section 8 Company?
A section 8 company which earlier was known as section 25 company is a legal form for non profit organizations (NPO) or Non Governmental organizations (NGO). Section 8 company is licensed company which is authorized to work anywhere in the country.
How to register section 8 Company in India ?
Section 8 company registration in India is unique and different concept. It is an non profit entity engaged in social work for the benefit of the country. The registration can be divided into three parts:
# Prepare DSC and file Name Approval: The first step is to prepare DSC and DIN. This takes sometime one to two days. Thereafter, you need to file for name approval. The name should be unique and should end with words like foundation, sanstha etc.
# File for License: After getting name approved, the next step is to prepare all the documents and then apply for license to the Regional director via form INC 12. This approval takes most of the time.
# File for Incorporation: After getting the license, we need to file for incorporation and once company is incorporated, you can start the social work under this company.
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FAQs about/Section 8
Section 8 company can be registered for many social factors like
- Blood bank
- Environment protection
- Other objects for general public utility.
Yes, to register the section 8 company in India, the central government approval is required. CG approval is applied before company registration. When the government is satisfied that registration is seek for some serious stuff and not for tax planning, then they proceed and grant the registration.
There is no minimum capital requirement for Section 8 Company in India. If you are planning to register a section 8 Company, then you don’t need to worry about the capital required.
Auditor under section 8 company is being appointed within 30 days by the board of Directors and no Central Government approval is required.
The difference between the three terms is as follows:
It is an simple registered NGO and does not have any specific authority.
Societies are registered under the Societies registration act and hence authentic.
Section 8 company is the most authentic NPO or NGO which is registered under Companies Act, 2013.
Lacks trust factor
Mild trust, as membership is an important criteria.
High on trust factor.
Trust deed is the most important document.
Deed of Societies is most important document.
Memorandum of Association is the most important document.
Registration cost is low.
Registration cost is somewhere between 15000 to 20,000
Registration cost is around 25000, due to work load involved.
Compliances as per deed
Various compliances including audit prescribed.
No, there is no concept of minimum number of members for section 8 Company. Anyone who can register the section 8 company need not worry regarding the membership. The requirement of having the membership is under Nidhi Company and not under section 8 company.
Taxation over section 8 company is treated at par with other companies. The profits are taxes @30%. However, if section 8 company is registered under section 12AA (tax exemption) of the income tax act, then Section 8 profit is completely exempt and no tax is levied on the company.
However, certain compliances is to be made every year to continue enjoying the tax exemption.
No, closure of section 8 company takes a lot of time and energy. It cannot be closed under any fast track mode like Strike off rules recently released. If you want to close the section 8 company, then we need to follow the full lengthy procedure to close down the company.
Further, before closure of the company, we need to get the compliance upto date. Because without making fully compliant company, the application for closure will not be accepted.
The important checklist to register the section 8 company is as follows:
- You must be clear with your social objectives
- You must have some idea on source of your funds and the utilization of the same.
- The documents of atleast two person are required to register the section 8 company.
- Draft your objectives under memorandum very clearly to avoid any rejection from the government department.
Yes, section 8 company is more costly than the simple trust registration. Section 8 company requires Central Government approval and many other additional requirements to start with.
On the other hand, the trust registration is done at the local SDM office and generally takes Rs.6000 to register. However, Section 8 company is more authentic and offers more satisfaction and trust to the general public.
The annual compliances of the section 8 company is very similar to normal companies. The highlights of which are as follows:
- Need to take atleast two board meeting during the year.
- Audit is mandatory
- Annual return is to be filed every year with other efiling forms like MGT 7 , AOC 4.
- Further every year income tax return is also required to be filed.
- Additional compliances to fulfill the registration like 12AA, 80G etc.
Section 8 company is a company without any profit motive. Its main objective is to achieve the social causes and to help the society in any way possible. NPO, NGO are similar terms and are used inter changeably. NPO and NGO is another name for trust, section 8 company. Trust registration is another option to register NPO in case section 8 company is good for you.
Section 8 company is one of the best forms to register in case you planning to register a NGO. However, it has certain disadvantages which are as follows:
- Section 8 company is difficult to start because it requires Central Government Approval.
- Section 8 compliance cost is high as compared to any other NGO/NPO form.
- Penalty provisions are little harsh under section 8 company.
Section 8 company is nonprofit company which aims to support the social objectives of the society. There are many advantages of this form over trust and society registration:
- It is easier to register under Income tax act, 1961 because section 8 company have proper documentation.
- It is the registered form of NPO and hence more trust factor to people donating into it.
- Section 8 company can work on PAN India basis and does not require any separate approval.
- Section 8 company is formed after Central Government approval and hence offers more authenticity.
Section 8 company registration is the first step to start your NPO/NGO in India. It does not provide you any tax exemption. Tax exemption is given by Income Tax Act, 1961. The two important registration required for tax exemption are as follows:
- Section 12AA Registration to exempt the income of the Company: To claim any exemption under the income tax act, you need to register under the section 12AA registration. Once registered, you need to comply with the provisions to avoid any scrutiny by the tax department.
- Section 80G Registration to provide exemption to the donors: This is a one step ahead registration. If you are registered under section 80G, then any person donating to your company can also claim the exemption in his IT return.
- FCRA Registration: In case you want to claim the donations from the foreign country, then you need to take registration under FCRA Act. However, to be eligible to take the foreign donations/contribution you should be atleast 3 years old company or you should apply for prior permission.
A NGO registered as a company under Companies Act, 2013 is known as section 8 Company. It is called section 8 company because the provisions relating to registration of this type of company is mentioned in section 8 of the Companies Act, 2013.
Section 25 Company is the old name of Section 8 Company. Earlier, before enactment of Companies Act, 2013, company law was governed by Companies Act, 1956. Under the Companies, act 1956 the law relating to NGO registration was mentioned in section 25 of the companies act, 1956 and hence earlier it was also called the Section 25 Company in India.
Section 8 company is the nonprofit organization which aims to work on the social matters of the society. Further, a section 8 company does not need to end the company name with the word “limited” or “private limited.” The names under section 8 companies may end with “foundation” “cry” or you may choose any other word.
The first word under section 8 company should be your brand or the name which you want to use in your NGO like PlantinIndia, being human etc.
Important Point: The new company name should not match the existing company or any existing trademark in India.