9911796707
TMI BlogNon-Profit Organizations Under Section 8 of the Companies Act: A Complete GuideX X X X Extracts X X X X X X X X Extracts X X X X ..... Non-Profit Organizations Under Section 8 of the Companies Act: A Complete Guide X X X X Extracts X X X X X X X X Extracts X X X X ..... esearch, social welfare, religion, charity, and environmental protection. Unlike other companies, a Section 8 company applies its profits or income solely towards promoting its objectives and is prohibited from distributing dividends to its members. Key Features of Section 8 Companies * Charitable Objectives: The primary aim is to promote non-profit activities in various fields, including education, social welfare, and environmental protection. * No Minimum Capital Requirement: There is no prescribed minimum capital for Section 8 companies. The capital structure can be altered as needed to support the organization's growth. * Limited Liability: Members' liabilities are limited to their shareholdings, protecting personal asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from the company's debts. * Separate Legal Entity: Section 8 companies possess a distinct legal identity, allowing them to own property, incur debts, and enter into contracts independently of their members. * Exemptions and Privileges: These companies enjoy various exemptions under company law, including reduced fees and stamp duties. Eligibility Criteria for Section 8 Company Registration To register as a Section 8 company, the following conditions must be met: * Number of Members: A minimum of two members is required for a private limited company structure, while a public limited structure requires at least seven members. * Directors: There should be a minimum of two directors for a private company and three for a public c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany. At least one director must be a resident of India. * Charitable Purpose: The company must be established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, environmental protection, or similar objectives. * Profit Application: Any profits or income should be utilized solely for promoting the company's objectives, with no distribution of dividends to members. Section 8 Company Registration Process Registering a Section 8 company involves several steps: 1. Obtain Digital Signature Certificates (DSC): All proposed directors must obtain DSCs to sign electronic documents during the registration process. 2. Apply for Director Identification Numbers (DIN): File Form DIR-3 with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Registrar of Companies (ROC) to obtain DINs for the proposed directors. 3. Name Reservation: Submit Form INC-1 to the ROC to reserve a unique name for the company. The name should reflect the company's objectives and comply with naming guidelines. 4. Draft Memorandum and Articles of Association (MOA and AOA): Prepare the MOA and AOA outlining the company's objectives, rules, and regulations. 5. File Form INC-12: Apply for a license under Section 8 by submitting Form INC-12, along with the draft MOA and AOA, declarations, and other required documents. 6. Obtain License: Upon approval, the ROC will issue a license in Form INC-16, granting permission to operate as a Section 8 company. 7. Incorporation Filing: File the Spice+ F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm (INC-32) along with the approved MOA, AOA, and other necessary documents to incorporate the company. 8. Certificate of Incorporation: After verification, the ROC will issue a Certificate of Incorporation, officially recognizing the entity as a Section 8 company. Documents Required for Section 8 Company Registration * Digital Signature Certificates of directors. * Director Identification Numbers. * Memorandum and Articles of Association. * Declarations in Forms INC-14 and INC-15. * Proof of registered office address. * identity and address proofs of directors and members. * Passport-sized photographs of directors and members. * Estimated income and expenditure statements for the next three years. Benefits of Registerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g as a Section 8 Company * Tax Exemptions: Section 8 companies can avail tax benefits under sections 12A and 80G of the Income Tax Act, 1961, subject to compliance with specified conditions. * Credibility: Being registered under the Companies Act enhances the organization's credibility, making it more attractive to donors and stakeholders. * Perpetual Succession: The company continues to exist beyond the lives of its members, ensuring uninterrupted operations. GST Registration for Section 8 Companies Goods and Services Tax (GST) registration is mandatory for non-profit organizations if their annual turnover exceeds the specified threshold or if they engage in interstate supply of goods and services. GST registration can be compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted online through the GST portal. Online GST Registration Process 1. Access the GST Portal: Visit the official GST portal at gst.gov.in. 2. New Registration: Direct to Services > Registration > New Registration. 3. Part A - Registration Form: Fill in basic details such as legal name, PAN, email address, and mobile number. 4. Verification: Enter the OTPs sent to your email and mobile number for verification. 5. Part B - Documentation Upload: Submit required documents, including business proof, identity proof, and bank details. 6. Submission and ARN Generation: Upon submission, an Application Reference Number (ARN) is generated for tracking purposes. 7. Approval and GSTIN Allocation: Once approved, a GST Identification Number (GSTIN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) is issued. Cancellation of GST Registration A Section 8 company may need to cancel its GST registration in case of business closure, turnover reduction, or regulatory changes. The steps for cancellation include: 1. Log in to the GST Portal. 2. Direct to Services > Registration > Application for Cancellation. 3. Fill in cancellation details and reasons. 4. Submit application with required documents. 5. Await approval and confirmation of cancellation. Conclusion A Section 8 company is an ideal legal structure for non-profits, offering credibility, tax exemptions, and a clear regulatory framework. Registering under Section 8 ensures legal recognition and compliance with the Companies Act, while obtaining GST registration allows orga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nizations to operate efficiently within the taxation framework. Identification the processes of registration and GST compliance helps non-profits manage their operations effectively and focus on their charitable objectives. X X X X Extracts X X X X X X X X Extracts X X X X
|
