Section 8 Company
What is Section 8 Company?
A Section 8 company in India works under the Companies Act 2013, and its a company registered with the objective of promotion of science, art, sports, education, research, social welfare, religious protection of the environment, charity, or any other such project. There are several limited companies established under the Companies Act. The government also grants these companies some exclusive license under the section of the Companies Act.
Section 8 company has several advantages in comparison to trust and society. Registration is governed by the ministry of corporate affairs, while the trust and society registration are governed by the state's registrar under the state government. For Section 8 companies, it is not required to use the words limited or private limited in the name. There is no such requirement regarding the minimum capital from 5th June 2015 under Section 8 Companies.
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Process of Section 8 NGO Registration
Three steps to incorporate Section 8 company apart from the document collection preparation and drafting.
Run approval
Reserve unique name is a type of filing done for reserving the name for a new company or for changing the existing name. This is the first step you must consider while registering your Section 8 company. Section 8 company will generally contain words like council club federation society institute Chamber of Commerce development association and others. The names of the approved shall be valid for at least 20 days.
Rd one license
This step plays a crucial role in the incorporation process. The name approval shall be valid for applying for the Rd one license. Rd one license is granted under Section 8 of the Companies Act as they work on a specific goal for the uplift of science, commerce, and environmental art. The profit earned shall be used towards completing these objectives.
Spice form
This is the final stage of incorporating the Section 8 company whether documents relating to the registered office like the rental agreements and utility bills are filed along the Rd license And the name approval certificate.
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Documents required for the Section 8 registration
- Dsc and DIN of the directors.
- Objectives and proposed work of the organization.
- Financial statements, including assets and liabilities for the five years.
- Personal documents of the directors.
Why register Section 8 Company – Benefits?
Tax exemption
As it is a nonprofit organization, they are exempted from some income tax provisions. They are also given other benefits and deductions. The company gains benefits under section 80 g of the Income Tax Act 1961. The best is that the company pays minimum stamp duty compared to other companies.
No title required
The company does not include the terms like private limited or limited as a suffix in the company name.
Transferring ownership is easy
Section 8 company is different from other companies where it is impossible to transfer ownership quickly; for Section 8 company, it is straightforward to leave the membership of the Section 8 company or to transfer the ownership.
Capital flexibility
Besides the company’s share capital, necessary funds are bought in the form of donations and subscriptions from members or even the general public.
Minimum compliances
Section 8 company needed to do less legal formalities than any other company. It gets special exemptions and privileges under the Companies Act 2013. Hence Section 8 company has less number of compiling required.
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