Engaging in non-profit pursuits through a Section 8 Company doesn't impede the possibility of generating revenue or income. Furthermore, several tax exemptions are extended to such entities. Even contributors who make donations in accordance with Section 8 of the Companies Act of 2013 are eligible for tax exemptions on their contributions. This signifies that the company can indeed amass funds, but the profits aren't distributed among stakeholders.

Distinct Legal Entities

Section 8 Company registration introduces a fresh legal entity that boasts a unique and unequivocal legal identity.

No Mandatory Initial Capital

Embarking on a Section 8 Company Registration in India doesn't necessitate any obligatory initial capital. Stamp Duty Waiver Stamp Duty Waiver The inclusion of stamp duty on the Memorandum of Association (MoA) and Articles of Association (AoA) for private limited companies doesn't apply to the incorporation of a Section 8 Company in India.

Absence of Stamp Duty

The establishment of a Section 8 Company in India is devoid of any stamp duty obligation, as the imposition of stamp duty on the MoA and AoA of private limited businesses doesn't extend to Section 8 Companies.

Enhanced Credibility

A Section 8 Company license exudes greater credibility when compared to other forms of charitable organizations.

Exemption Benefit for Donors

If a Section 8 Company is registered under Section 80G, contributors can avail exemptions as per the provisions of this section.

Tax Advantages

Numerous tax benefits are associated with Section 8 Company Registration in India.

1. Voter ID
2. PAN Card of all Members
3. Phone Bill/Electricity Bill
4. Most Recent Bank Statement of Members and the Company
5. Aadhaar Card of all Members
6. Passport Size Photograph of all Members
7. Copy of the Rental Agreement
8. Passport
9. Driving License

Eligibility Criteria for Applying for Section 8 Company Registration

1. An individual, Hindu Undivided Family (HUF), or a private limited Company is eligible to initiate the process of Section 8 Company registration within India.
2. A minimum of two individuals who will serve as shareholders or directors of the Company must fulfill all requirements for Section 8 Company registration.
3. No remuneration or payment, in any form, can be drawn by any member of the Company.
4. At least one of the directors should be a resident of India.
5. The distribution of profits should not occur directly or indirectly among the members or directors of the Association.
6. The primary objective should revolve around the advancement of sports, social welfare, scientific and artistic progress, education, and financial support to underprivileged communities.
7. The Company should have a well-defined vision and strategic plan for the upcoming three years.
8. The surplus generated must be exclusively utilized to fulfill the core purpose of the Section 8 Company's establishment.
9. Annual submission of records, reports, and returns of the Association to the Registrar of Companies (ROC) is mandatory to ensure compliance.
10. Property Management: The Company holds the responsibility for property management, and any sale must adhere to the regulations stipulated under the Companies Act (e.g., with Board of Directors' consent in the form of a resolution).

The Legalities (Incorporation) Amendment Regulations, 2019 have been enacted to streamline the process of incorporating Section 8 companies as of June 7, 2019. These regulations stipulate that the prerequisite of a prior filing of INC-12 must be fulfilled.

Name Application/Reservation in the SPICe+ Form

Request for name availability via the SPICe+ application form. Terms such as Legal Trust, Federation, Council, Association, Chambers, Foundation, Forum, and Confederation must be included in the name of Section 8 companies seeking incorporation.

Applicants can propose two names sequentially and are allowed only one resubmission using the SPICe+ form.

Preparation of Memorandum of Association (MOA) and Articles of Association (AOA) The updating of affiliation acts as a sanction for the organization and outlines the scope of the organization's operations. While the MOA elaborates on the relationship within the organization, the AOA covers its internal governance.

Use Form INC-13 to file the MOA of a Section 8 Company, whereas there is no prescribed format mentioned for the AOA of a Section 8 Company.

Each member of the association must sign the memorandum and articles and provide their name, address, photograph, and occupation (if any), in the presence of a single witness, who will also sign the document, authenticate the signatures, and provide their name, address, photograph, and occupation.

Overview - Total Number of Board Meetings and Quorum

As per the exemption notice in conjunction with section 173(1) and 174(1), a Section 8 company must hold at least one meeting within six calendar months, and the quorum for its board meetings is eight directors or 1/4th of its total strength, whichever is lesser, sequentially. However, the quorum should consist of a minimum of two individuals.

Issuance of 80G Certificate

The 80G Certificate is granted by the Income Tax Department to non-profit organizations such as non-governmental organizations (NGOs), charitable trusts, or Section 8 companies. The primary benefit is that donors contributing to such NGOs can avail a tax deduction of 50% of their donation from their Gross Total Income. The purpose of the 80G certificate is to encourage more contributions to charitable entities.

Issuance of 12A Registration

Under the 12A NGO registration, trusts, NGOs, and other Section 8 non-profit entities are exempt from paying income tax. NGOs are entities primarily established for charitable and non-profit activities. However, if not registered under Section 12A of the Income Tax Act, they would be liable to pay taxes at the standard rates despite generating revenues.