Structured Biiz

SECTION 8 COMPANY (NOT FOR PROFIT)​

Who must opt for Section 8 Company & Why?

Section 8 Company is a Non-Profit Organisation or a Company incorporated with a Charitable purpose. It is basically established for promoting Commerce, Art, Science, Sports, Education, Research, Social Welfare, Religion, Charity, Protection of environment or any such other object, provided the profits or other income is applied for promoting only the objects of the Company and no dividend or profit is paid to its members. All the profits and incomes are compulsorily required to be utilised towards charitable purposes for which the Section 8 Company is formed. The incorporation process is the same as that of the other companies. Some additional requirements are required to be complied with, for issuance of licenses under Section 8.

Section 8 Company enjoys the status of being a separate legal entity having perpetual existence, unless dissolved. It can own, sell and transfer property and can also incur debts.  It also enjoys a Limited Liability structure benefits, wherein the Owner’s personal assets are not attached to the business liabilities for repaying off the debts or for paying off the creditors.

Section 8 Company can apply for 12A registration under the Income Tax Act, 1961 in order to enjoy the exemption from paying income tax on their surplus income. However, new registrations for income tax exemption needs to be obtained under Section 12AB with effect from 1st April, 2021. Post 1st April, 2021, provisional registration shall be granted to new registrations for a period of 3 years.

Once Section 8 Company obtains Section 80G Certificate, entities or individuals making an eligible donation to such Section 8 Company can avail tax exemption on the amount donated. With effect from 1st April, 2021, Section 80G Certificate shall be granted for a period of 5 years. Even old Section 8 (Erstwhile Section 25) Company also needs to apply afresh for 80G Certificate.

In case Section 8 Company intends to raise foreign contributions for promoting the cause, then a registration under Foreign Contribution & Regulation Act is required to be obtained. Section 8 Company must be in existence for a minimum of 3 (Three) years, while making FCRA registration.

Difference between Society, Trust & Section 8 Company

Society

Trust

Section 8 Company

  • It is regulated by Society Registration Act, 1860. Members of the same family can not be members in a Society. Minimum 7 Members required for state level society and minimum 8 members for national level. Foreign Contribution possible. However, FCRA registration is difficult, if there are any foreign members. State level society would have state level jurisdiction.
  • It is regulated by the Trust Act / Bombay Public Trust Act. Trustees can be family members. However, certain Govt Ministries / Departments might refuse funding, in case all the Trustee are from the same family. Minimum 2 Trustees required. Foreign Contribution possible. However, in case there is any foreign member in a Trust, FCRA registration could not be obtained.
  • It is regulated by Companies Act, 2013. Anybody can be a director / member. However, certain Govt Ministries / Departments might refuse funding, in case all the members / directors are from the same family. Minimum 2 members required in case of Private & 7 in case of Public Co. Foreign Contribution can be received. FCRA registration could be obtained in case of Sec 8 Company. In the case of FCRA, it is most preferred.

Compulsory Annual Compliances

Post Formation Compulsory Compliances

Compliances & Registrations After Formation

  • MCA Filings
  • Accounting & Auditing
  • IT Filing
  • MCA Filings that includes filing of forms for:
    Commencement Certificate
    Appointment of Auditors
    DIR-3 KYC of Directors
    Preparation of Statutory Register
    Issue of Share Certificates
    Printing & Payment of Stamp Duty on Share Certificates Conducting First Board Meeting within 30 days of incorporation Conducting 4 Board Meetings in a year
    Conducting 1 Annual General Meeting
    Annual Disclosures of interest / non-disqualification by Directors
    Filing of Financial Statements & Returns with the Registrar of Companies
  • 12A Registration under the Income Tax Act, 1961 in order to avail exemption from paying income tax on the surplus income
  • Section 80G Exemption Certificate in order to avail tax exemption on the amount donated
  • FCRA Registration in case the Section 8 Company intends to raise foreign contribution
  • Trademark Registration to register Brand name and logo of the Company
  • GST Registration & Compliances
  • Profession Tax filing, in case the Company has hired any employees
  • Trade License, in case of requirement
  • Employees Provident Fund Registration / Compliances will be applicable once the Company crosses the threshold no of employees i.e., 20 employees
  • Employee State Insurance Corporation Registration / Compliances will be applicable once the Company crosses the threshold number of employees i.e., 10 employees in Other states & 20 in Maharashtra
  • & Many More…

Company Formation Package

INR 16,899/-

All inclusive

  • Company Formation with Rs. 1 Lac Authorised Capital;
  • 2 Class III Digital Signatures for Directors & Subscribers;
  • Director Identification Number for 2 Directors;
  • Application for the availability of name of the Company;
  • Drafting of Memorandum & Articles of Association of the Company;
  • Preparation and filing of formation documents of the Company;
  • Payment of registration fees to the Registrar of Companies;
  • Obtaining Certificate of Incorporation from the Registrar of Companies;
  • PAN and TAN of the Company
  • GST Registration (Optional)
  • Employees Provident Fund Organisation Registration (Compliances will be applicable once the Company crosses the threshold no of employee i.e., currently 20 employee)
  • Employee State Insurance Corporation Registration – (Compliances will be applicable once the Company crosses the threshold Limit – 10 employees in other states & 20 in Maharashtra)
  • Shops & Establishment Certificate Registration
  • License as Section 8 Company with the ROC
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Timeline: 15-30 Days
(*Inclusive of Govt. Fees on Form filing. Govt Fees is as applicable in Maharashtra. Govt Fees will vary as per the State and the difference shall be payable by the Client.)

Request you to provide 2 Unique Names of the Company. In case the name approval is not granted in the first instance, Govt Fee of Rs. 1,000/- and Our Fee of Rs. 999 shall be charged separately for re-application of name.

Post Formation Compliance Package

INR 9,999/-

Inclusive of GST

  • Preparation of documents for opening a Current Account;
  • Filing of Certificate of Commencement of Business;
  • Appointment of First Auditor & filing of document in regard to the same;
  • Obtaining Statutory Declaration from 2 Directors;
  • Filing of DIR-KYC of 2 Directors;
  • Preparation of Statutory Registers;
  • Preparation of First Minutes of the Board Meeting;
  • Issue of Share Certificates;
  • Post Formation Compliance Guidance!!
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(*Excluding Govt. fee and reimbursements, if any. and any penalty levied due to delay from the Client's end.)