SECTION 8 COMPANY REGISTRATION
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- Salary Income
- Rent Income From One Property
- Interest Income etc.
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SECTION 8 COMPANY REGISTRATION @ ₹
- Salary Income
- Rent Income From Properties
- Capital Gains or Losses
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SECTION 8 COMPANY REGISTRATION @ ₹
- All Income Covered in ITR-2
- Income From Business or Profession
- Interest Income etc.
- Income or Loss From Intraday Share Trading
- Income or Loss From Derivatives (F&O)
- Director/Patner in a Company/LLP
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SECTION 8 COMPANY REGISTRATION @ ₹
- Salary Income
- Rent Income From Propeties
- Professional Receipts up to Rs. 50 Lacs
- Businesses Covered under Presumptive Taxation
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Section 8 Company
An Overview
A Section 8 Company, as per the Companies Act, 2013 in India, is a type of nonprofit organization formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other charitable objectives. This form of company is established for promoting charitable causes or social welfare activities.
Here’s an explanation of a Section 8 Company in the context of an accounting firm:
Nature of a Section 8 Company: A Section 8 Company, also known as a nonprofit organization or a not-for-profit company, is formed primarily for promoting charitable or nonprofit objectives. In the case of an accounting firm, if it’s registered as a Section 8 Company, it would mean that the firm’s primary objective is to promote charitable activities related to accounting, finance, education in these fields, or any other related social welfare activities.
Limited Liability and Non-distribution of Profits: Similar to other types of companies, a Section 8 Company has limited liability for its members. The company’s profits, however, cannot be distributed among its members. Any income or profits earned by the accounting firm must be utilized towards the charitable objectives and cannot be distributed as dividends to its members.
Incorporation Process: To register as a Section 8 Company, an accounting firm needs to apply for a license by submitting the necessary documents, including the memorandum and articles of association, declaration of its charitable objectives, details of directors, and other required forms and declarations to the Registrar of Companies (RoC).
Tax Benefits: Section 8 Companies enjoy certain tax benefits and exemptions under the Income Tax Act, subject to compliance with specific conditions. They may be eligible for tax exemptions on income generated from their charitable activities.
Regulatory Compliance: These companies are subject to certain regulatory compliance requirements such as maintaining proper accounting records, conducting annual audits, filing annual returns, and adhering to specific reporting requirements as mandated by the Companies Act and other relevant regulations.
Asset Utilization: Any assets or profits generated by the Section 8 Company must be utilized for the promotion of its charitable objectives. These assets cannot be distributed among the members or shareholders.
For an accounting firm operating as a Section 8 Company, the primary focus would be on providing charitable services related to accounting, finance, or other specified social welfare activities while complying with the legal and regulatory framework governing such nonprofit organizations.
Information / Documents Required
General Documents / Informations Required from all assessees:
Memorandum of Association (MOA): This document outlines the objectives and aims of the company. For a Section 8 Company, the MOA should state the charitable or social welfare objectives that the organization intends to pursue.
Articles of Association (AOA): These contain rules and regulations for the management of the company’s internal affairs. It details the roles and responsibilities of the directors, members, and the organization’s operations.
Director Identification Number (DIN) and Digital Signature Certificate (DSC): Directors of the company need to obtain DIN, and DSCs are required for digitally signing the incorporation documents.
Address Proof: Documents proving the registered office address of the company, such as a rental agreement, lease agreement, or utility bills.
Identity and Address Proof: Identity proof (such as Aadhar card, passport, voter ID, etc.) and address proof (such as utility bills, bank statements, etc.) for all directors and shareholders.
Declaration and Affidavit: Declaration and affidavits by the proposed directors affirming compliance with the requirements for forming a Section 8 Company.
Consent Letters: Consent letters from all the directors and shareholders of the company agreeing to become a part of the organization.
NOC from the Owner: If the registered office is owned by a person other than the company, a No Objection Certificate (NOC) from the owner is required.
Financial Statements: Initial financial statements and projections for the next few years, showcasing the company’s estimated income and expenditure.
Power of Attorney (if applicable): In cases where a representative is filing the incorporation documents on behalf of the company, a Power of Attorney document might be required.
Other Incorporation Forms: Various incorporation forms prescribed under the Companies Act, such as Form INC-12 for applying for a license, need to be filled out and submitted.
FAQ's
A Section 8 Company is a nonprofit organization established for promoting charitable or social welfare objectives. It differs from other companies in that it cannot distribute profits among its members and must utilize its income towards achieving its charitable goals.
A Section 8 Company can be established for promoting various charitable purposes such as education, healthcare, art, culture, science, sports, environment, social welfare, or any other objectives beneficial to the community.
Some benefits include tax exemptions on income generated from charitable activities, limited liability for its members, access to funding and grants, and credibility while undertaking social welfare projects.
Any individual who is eligible to be a director according to the Companies Act, 2013 can be appointed as a director of a Section 8 Company. They need to obtain a Director Identification Number (DIN) and fulfill other requirements.
While a Section 8 Company can generate income, it cannot distribute profits among its members. Any surplus generated must be utilized towards furthering the company’s objectives and cannot be distributed as dividends.
The incorporation involves drafting the Memorandum and Articles of Association, obtaining necessary approvals, applying for a license, obtaining Digital Signature Certificates (DSCs) and Director Identification Numbers (DINs), and filing the required documents with the Registrar of Companies (RoC).
Yes, a Section 8 Company must comply with various regulatory requirements, including maintaining proper accounts, conducting annual audits, filing annual returns, and adhering to the objectives specified in its MOA.
Yes, a Section 8 Company can be converted into another form of company under specific circumstances and by following the procedures outlined in the Companies Act, subject to regulatory approvals.
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