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Section-8 Company

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Section-8 Company

Are you passionate about making a positive impact on society? If you’re considering establishing a non-profit organization in India, you may have come across the term “Section 8 Company.” Here’s everything you need to know about Section 8 Companies and how they can help you achieve your philanthropic goals.

A Section 8 Company, as per the Companies Act, 2013, is a type of non-profit organization that is formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any other charitable objectives. Unlike other types of companies, the primary focus of a Section 8 Company is not to generate profits for its members but to promote charitable activities.

Benefits of Using Section-8 Company Services

  • Non-Profit Objective: The primary objective of a Section 8 Company is to promote charitable activities rather than making profits for its members. Any income generated by the company must be utilized towards achieving its charitable objectives.

  • Limited Liability: Similar to other forms of companies, the liability of the members of a Section 8 Company is limited to the extent of their contribution to the company’s assets. Personal assets of members are not at risk in case of any liabilities incurred by the company.

  • Tax Benefits: Section 8 Companies enjoy certain tax benefits, including exemption from income tax on the surplus income generated from charitable activities. Additionally, donations made to Section 8 Companies may be eligible for tax deductions under the Income Tax Act.

  • No Minimum Capital Requirement: Unlike other types of companies, there is no minimum capital requirement for forming a Section 8 Company. The company can be incorporated with any amount of capital deemed necessary to achieve its charitable objectives.

  • Government Approval: In order to register as a Section 8 Company, approval from the Central Government is required. The application must demonstrate that the proposed activities of the company are exclusively for charitable purposes.

Documents needed for Section-8 Company

  1. Memorandum and Articles of Association: The Memorandum and Articles of Association outline the objectives, rules, and regulations governing the operations of the Section 8 Company. These documents must be drafted carefully to ensure compliance with legal requirements.

  2. Registration Documents: Various documents, including the application for incorporation, declaration by promoters, and consent of directors, are required for the registration of a Section 8 Company. Proper documentation is essential to obtain approval from the Central Government.

  3. Tax-related Documents: Section 8 Companies must maintain proper records of income, expenses, and donations received to avail tax benefits. Timely filing of tax returns and compliance with tax regulations is crucial for maintaining the company’s non-profit status.

  4. Annual Filings: Section 8 Companies are required to file annual returns and financial statements with the Registrar of Companies. Accurate and up-to-date documentation is necessary to fulfill these statutory requirements.

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