Section 8 Company Registration
A Section 8 Company is a Non-Profit Organization (NPO) formed to promote charitable objectives such as education, art, science, sports, environment protection, and social welfare. Unlike other companies, its profits are not distributed among members but used for its objectives.
Ways to Register a Non-Profit Organization in India
1️⃣ Trust – Registered under the Indian Trusts Act, 1880 (Requires a Trust Deed).
2️⃣ Society – Registered under the Societies Registration Act, 1860.
3️⃣ Section 8 Company – Registered under the Companies Act, 2013 (Previously Section 25 under the Companies Act, 1956).
Procedure For Formation Of Section 8 Company Through TaxWare ?
Benefits Of Formation Of Section 8 Company
(A) Limited Liability
Shareholder enjoys limited liability to the extent of capital invested. In case of any unforeseen liabilities, it would be limited to the company and not impact the shareholders. Shareholder's personal assets protected in the event of the company's insolvency.
(B) Separate Legal Existence
A Section 8 company is a Separate legal entity from its Owners and Management in the eyes of law.It can have a PAN number, bank accounts, licenses, approvals, contracts, assets and liabilities in its unique name.
(C) Corporate Title
Section 8 Companies are not required to add the suffix title “Limited” or “Private Limited” at the end of their name.
(D) Credibility
A Section 8 Company has more credibility as compared to any other Non-profit organization structure like Trust or Society.
(E) Share Capital
There is no minimum share capital requirement in formation of Section 8 Company. In case they are formed without capital, the necessary funds for carrying the business are brought in form of donations, subscriptions from members and general public.
(F) Tax Exemptions / Benefits
Section 8 Companies are given numerous deductions and other tax benefits. One of such exemption is under Section 80G of the Income Tax Act, 1961, whereby donors to Non-Profit Organizations may claim a 50% rebate against donations made.They are also required to pay less stamp duty as compared to other organizations.
Why Choose a Section 8 Company Over Other Non-Profit Entities?
| Non-Profit Type | Legal Status | Limited Liability | Tax Benefits | Government Recognition |
|---|---|---|---|---|
| Trust | Informal | ❌ No | ❌ Limited | ❌ Less Recognition |
| Society | Registered under Societies Act | ❌ No | ✅ Yes (80G, 12A) | ✅ Moderate |
| Section 8 Company | Registered under Companies Act | ✅ Yes | ✅ Yes (80G, 12A) | ✅ High |
