SECTION 8 COMPANIES IN INDIA

Section 8 Companies in India- “ A NGO For people and Societies’ Welfare…”

“World/Nation’s Charity is a supreme virtue, and the great channel through which the mercy of God is passed onto mankind…”

Working for the profit of humanity or society is the greatest deed of all, and Non-profit organizations are the best epitome of it.

So, in this small column; let’s stroll through the Non-profit sector of India i.e. Section 8 Companies in India…

Section 8 Companies like NGOs (Non- Government Organizations) are regulated under the rules & regulations of the Indian Companies Act, 2013. Section 8 company Registration is done online on MCA Portal. After launching of Spice+ forms for section 8 company registration, Online registration is possible. Section 8 Companies are basically formed for conducting Charitable activities. In India, we can form NGO by Incorporating following Constitution-  

• Form A Society under Society Act-1860    

• Form A Trust under Trust Act-1882   

• Section 8 Companies under Company Act-2013

Here, we have explained the cost involved, Documents required and benefits of section 8 companies in India.

What is Section 8 Company

Section 8 Company was introduced with an objective of promoting research, religion equality, social welfare, charity, commerce, art, science, sport, education and the sustainable development by protecting the environment, provided that all the profits (if any) or any other incurred benefit will be applied for promoting such elements and no dividend will be paid to the members of the Company. That is when, it was decided to mark them as Section 8 companies, which are registered for charitable or not-for-profit purposes.

Benefits / advantage of the Section 8 Companies

Everything in this world comes with some amount of advantages and disadvantages. Let’s count on the benefits of Section 8 Companies-

• Many privileges and exemptions under the Company Law    

• No painstaking registration process    

• No Physical presence required    

• Exemption from requirement of Minimum Paid-up Capital    

• Exemption of Stamp duty for registration    

• Non-application of Companies Auditor & Report Order (CARO) 2003    

• Registered partnership firm can be a member in its own capacity   

• Tax deductions to the donors of the Company under section 12AA and 80G of the Income Tax Act.    

• Further, these companies also do not need to include the words “Limited” or “Private Limited” in their names, as all other companies have to.

These companies can be formed with or without share capital, in case they are formed without capital, the necessary funds for carrying the business are brought in form of donations, subscriptions from members and general public.

Other key benefits are-

Section 8 companies do not aim to make profits. Their objectives are purely charitable in nature. They aim to further causes like science, culture, research, sports, religion, etc.

Benefits / advantage of the Section 8 Companies

Everything in this world comes with some amount of advantages and disadvantages. Let’s count on the benefits of Section 8 Companies-    

• Many privileges and exemptions under the Company Law    

• No painstaking registration process    

• No Physical presence required    

• Exemption from requirement of Minimum Paid-up Capital    

• Exemption of Stamp duty for registration    

• Non-application of Companies Auditor & Report Order (CARO) 2003    

• Registered partnership firm can be a member in its own capacity    

• Tax deductions to the donors of the Company under section 12AA and 80G of the Income Tax Act.    

• Further, these companies also do not need to include the words “Limited” or “Private Limited” in their names, as all other companies have to.

These companies can be formed with or without share capital, in case they are formed without capital, the necessary funds for carrying the business are brought in form of donations, subscriptions from members and general public.

Other key benefits are-

Section 8 companies do not aim to make profits. Their objectives are purely charitable in nature. They aim to further causes like science, culture, research, sports, religion, etc.

​Documents and other Requirements for opening section 8 Company are

• Must have at least two shareholders    

• Must have at least two Directors (Directors & shareholders can be the same persons)    

• Indian Residency of at least one Director is required    

• No minimum capital is required    

• The Income-tax PAN CARD is mandatory (if Indian nationals) of members    

• Any identity proof like Voter ID/Aadhar Card/Driving License/Passport (it is a mandatory proof in case of foreign nationals) is required    

• Proof of Residence is required (Electricity Bill/Telephone Bill/Mobile Bill/Bank Statement)    

• Registered office address proof    

• Passport size photographs of all Directors/ Promoters    

• Any other documents establishing the ownership such as Sale Deed/House Tax receipt etc along with the no objection certificate    

• Digital Signatures of members

Section 8 company Registration Fees

Section 8 Company Incorporation Involves Government fees, Documentation preparation fees like DSC, Din ( Director Identification number) and Professional fees. Team Tax Advisory will Provide you Section 8 Company Incorporated on your fingertips in just 11999/- ( Inclusive of all taxes)

Above package includes-

• Name Approval fee of section 8 company    

• 2 DSc    

• 2 Din number    

• Government fees like stamp duty on AoA, MOA and  Capital Contributed.    

• Pan card of NGO    

• Online Bank Account Opening of NGO

Procedure for incorporation of section 8 company

Step 1) First of all, we have to decide the name of our NGO. It should be unique and shall not match with any other Registered NGO. Team Tax Advisory will also help you in choosing a great name for your company. Further, you can also check company names by visiting MCA portal, check section 8 company name- http://www.mca.gov.in/mcafoportal/showCheckCompanyName.do

Step 2) After selecting name, we will proceed to apply for Digital signatures (DSC) by collecting your Documents as explained above.

Step 3) In step-3, we will prepare your section 8 company application which includes preparation of Article of association, details of members, Initial capital contributed etc

Step 4) Now, In section 8 company, we also have to prepare Projected Income Expenditure statement for 3 years. This is simply a statement which explains the activity of NGO, Donation received, expenditure incurred and surplus recorded. It is prepared on projection basis and highly depends on initial capital contributed.

Step 5) we will send you some documents online which you have to get it sign and send us back. These documents later will be attached in application and we will file your application by paying government fees online.

Step 6) Normally, section 8 company is incorporated in 10-15 days. After receiving the approval, we will provide you the following

• Article of association of NGO    

• Pan card of NGO    

• Din numbers    

• Bank account opening instructions and papers   

• Certificate of Incorporation

All these documents will be provided to you Online and we will courier it at your registered address too.

NGOs- SECTION 8 COMPANIES

“Trying to make a Big difference in the Nation-INDIA!”

What NGOs exactly are?

Non-Governmental Organizations (NGOs) exists outside the government & private market sectors, which is why it is referred to as the third sector in the society i.e. non-profit sector.

Basically, NGOs are the Networking & Support centers for the masses, which fills the gap between the citizens & community and National & local Governments with Information, Knowledge, Finances, Services and Capacities.

What are the Categories of NGOs?

The term NGO is very broad and encompasses   many different types of organizations. They are divided into 4 types- Charitable, Participatory, Service and Empowering. A few other categories are listed below-

What are the Objectives of NGOs?

NGOs play significant role in the field of ‘Development in Development’. Here are some of its main objectives:

• Promoting democracy    

• Advocating for Human Rights    

• Promoting sustainable socio-economic development    

• Providing Humanitarian relief    

• Supporting educational and cultural renewal    

• Promoting talent & art of the society

Best Examples of NGOs in India-

• Goonj    

• Childline India    

• Katha    

• Rescue Foundation    

• Smile Foundation    

• Give India    

• HelpAge India    

• Feeding India    

• SIPARD    

• CRY- Child Rights & You    

• Rural Health Care Foundation    

• Kalgidhar Society    

• Udaan

CONCLUSION

Now, coming back to Section 8 Companies briefing; it is very important to know that these companies are based on the ‘License’ granted to them. So, they cannot even alter their memorandum or articles of association without the permission of Central Government (Govt. of India). They are cannot perform any action that the license disallows.

Their license can be cancelled/revoked on the following grounds:

• If the company flouts/unfollow the provisions of section 8    
• If the Terms of the license are violated    
• If the conduct is fraudulent, or it violates its own objectives and public policy

Winding up themselves is very easy for these companies as Section 8 Companies of India can wind-up or dissolve themselves voluntarily or under orders given by the Central Government. If any assets remain after satisfaction of debts and liabilities upon such winding-up, the National Company Law Tribunal can order the transfer of these assets to a similar company. It can also order that they must be sold and the proceeds of this sale should be credited to the Insolvency and Bankruptcy Fund.

Therefore, Section 8 Companies are always been seen as a special purpose vehicle, which accomplishes the Government’s mission for the betterment of the society. Non-profit sector is the bridge between the society and their well-being providing a enormous platform, where one can join hands to work & contribute to societal issue; in order to make this ‘World a better place…’

Section 8 Companies or Not-for-Profit or Non-Profit or NGOs should always be in picture that will bring a drastic & a best volunteer change, not only in India but globally.

“Rekindling Hopes, Rebuilding Society, Reaching the Unreached, Recreating a Better Nation, and Reviving the World…”

Section 8 Companies- Preserving the Heritage of the Nation and Promoting the Social & Cultural Activities of the Nation- INDIA!