Understanding Section 8 Company Registration: A Comprehensive Guide
Are you passionate about making a positive impact on society? Do you have a vision to contribute to the betterment of your community? If so, forming a Section 8 Company might be the ideal path for you. In this guide, we'll delve into what Section 8 Company Registration entails, its benefits, and the steps involved in setting up one.
What is a Section 8 Company?
A Section 8 Company, as per the Companies Act, 2013, is a type of non-profit organization (NPO) that aims to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other similar objective. Unlike other companies, Section 8 Companies do not distribute profits among its members; instead, all income is reinvested to promote the company's objectives.
Benefits of Section 8 Company Registration
Tax Exemptions: One of the significant advantages of registering as a Section 8 Company is the eligibility for tax exemptions. These companies are exempt from paying income tax on their profits if they meet certain conditions laid out by the Income Tax Act.
Limited Liability: Members of Section 8 Companies enjoy limited liability protection. This means that their personal assets are not at risk in case the company faces financial difficulties or legal issues.
Perpetual Existence: Unlike other forms of NPOs like trusts and societies which may have limited lifespans, Section 8 Companies enjoy perpetual existence. They are not affected by the death or departure of their members and can continue to pursue their objectives indefinitely.
Credibility and Trust: Being registered under the Companies Act lends credibility to a Section 8 Company. It enhances trust among donors, stakeholders, and the public, thereby making fundraising and partnerships easier.
Access to Grants and Funding: Many government and private agencies offer grants and funding exclusively to Section 8 Companies engaged in activities benefiting society. Registration opens doors to such financial support, enabling the organization to scale its operations and impact.
How to Register a Section 8 Company
Name Approval: The first step is to choose a unique name for your Section 8 Company and get it approved by the Registrar of Companies (ROC).
Memorandum and Articles of Association: Draft the Memorandum and Articles of Association of the company, outlining its objectives and rules of operation.
License Application: Apply for a license under Section 8 of the Companies Act by submitting the necessary documents to the ROC.
Incorporation: Once the license is granted, proceed with the incorporation process by submitting the required forms and fees to the ROC.
Tax Registration: Obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the company.