There are certain certifications that a Section 8 company must get in order to avail some benefits. Now learn more about it.
A Section 8 Company is one that has been licensed under Section 8 of the Companies Act of 2013. One can avail of different certifications for a section 8 company to enjoy more benefits from the government. The fundamental goal of forming a section 8 corporation is to promote non-profit goals. Many of these businesses are primarily altruistic and non-profit in nature. As a result, it resembles a Trust or a Society. Furthermore, it plans to use any revenues or other money to promote its objectives.
The main objectives of Company registered u/s 8 are:
- Promoting research,
- Social welfare,
- Religion,
- Charity,
- Commerce,
- Art,
- Science,
- Sports,
- Education, etc
Section 8 Company Advantages
- It is exempt from stamp duty when it comes to registration.
- Furthermore, the company’s donors are eligible for a tax deduction.
- Companies under Section 8 can be incorporated with or without share capital. As a result, funds are raised through donations.
- Shareholders can readily transfer their shares.
- Furthermore, these businesses are not required to preserve any titles or suffixes.
Section 8 Company: Incorporation Procedure
To make the incorporation procedure easier, the Companies (Incorporation) Sixth Amendment Rules, 2019 dated 7th June 2019 eliminated the need for filing Form no. INC 12, which was previously required. This modification has made the process of forming Section 8 firms as simple and straightforward as that of other businesses.
Section 8 Companies can be formed by reserving names in part A of the Spice+ form, then filing part B of the Spice+ form, or by filing Spice+ immediately. During the incorporation, the section 8 company will be given a license number.
Certifications for Section 8 Company: An Overview
- Section 8 If a company’s major operation is ‘charitable purpose,’ as defined by section 2(15) of the IT act of 1961, it is exempt from certain income tax requirements. They can also take advantage of a number of other tax deductions and benefits under Section 80G of the IT act of 1961.
Section 80G of the Income Tax provides benefits to an NGO’s donors, whilst Section 12A Registration would help an NGO get its income tax-free. Both the 80G and 12A registrations are only for non-profits and charity organisations.
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- A Section 8 corporation can register with the FCRA to accept funds from abroad. Furthermore, FCRA Registration is required in order to claim the Act’s reliefs and benefits.
Section 80G Certificate for a Section 8 Company
The income tax department issues an 80G Certificate to a non-governmental organisation (NGO) such as a charitable trust or a Section 8 Corporation. The 80G Certificate is given to encourage donors to provide money to non-profit organisations.
Furthermore, when a donor makes a donation to such an organisation, they are allowed to deduct that amount from their Gross Total Income, which results in a tax exemption of 50%. In order to qualify for the exemption, the donor must also submit a stamped receipt for the donation. The name of the donor, the date of the donation, and the organization’s PAN must all be included on the receipt.
Section 12A Certificate for a Section 8 Company
Trusts, NGOs, and Section 8 Companies are all eligible for a one-time tax exemption under Section 12 A of the IT Act of 1961. Organizations such as a Section 8 company with a Section 12A registration are free from paying taxes on their surplus income. Section 8 companies need to submit their certificate of incorporation and copies of MoA and AoA to obtain this certificate.
Section 8 Company Registration in Tamil Nadu
A Section 8 Company is a type of non-profit organization that operates for the promotion of social welfare, art, science, education, charity, and other similar objectives. If you are interested in registering a Section 8 Company in Tamil Nadu, here is some information you need to know:
Benefits of Opening a Section 8 Company in India
Tax Benefits: Section 8 Companies enjoy numerous tax benefits, including exemptions on income tax and capital gains tax.
No Minimum Capital Requirement: There is no minimum capital requirement for registering a Section 8 Company in India.
Separate Legal Entity: A Section 8 Company has its own legal identity, separate from its members. This provides limited liability protection to the members.
Credibility and Trust: Section 8 Companies, due to their objective of social welfare, gain trust from the general public, enhancing their brand name and goodwill.
Access to Funding: Section 8 Companies can receive grants, donations, and funding from various sources, including government agencies, corporations, and individuals.
Section 8 Company Incorporation Process
To register a Section 8 Company in Tamil Nadu, you need to follow these steps:
Prepare Digital Signature Certificate (DSC): The first step is to prepare a Digital Signature Certificate (DSC) for the proposed directors of the company.
File Name Approval: Apply for name approval with the Registrar of Companies (ROC) to ensure that the proposed name is unique and complies with the naming guidelines.
Draft Memorandum and Articles of Association: Prepare the Memorandum and Articles of Association, which outline the objectives and rules of the company.
Obtain License: Apply for a license under Section 8 of the Companies Act from the Central Government or the Regional Director.
Submit Documents: Submit the required documents, including the Memorandum and Articles of Association, along with the license application.
Registration: Once the documents are verified and approved, the Registrar of Companies will issue a Certificate of Incorporation, officially registering the Section 8 Company.
Also, Read:
- Form 7 ITR for Section 8 Company
- Section 8 Company Registration Requirements
- Conversion of Section 8 Company Into Private Company
FAQs
Can a Section 8 Company Have Unlimited Liability?
Only a limited company registered under this Act or any earlier company law may apply to the Registrar for the issuance of a license, according to Rule 20(1) of the Companies (Incorporation) Rules, 2014. As a result, a corporation with unlimited liabilities cannot be registered as a corporation under Section 8.
Can a Section 8 Company Accept Donations?
Yes, donations can be accepted by a Section 8 Company. These businesses are a type of charitable organisation. As a result, they are eligible for a number of tax breaks. Especially the donors who support such businesses. As a result, the contributors can claim a tax deduction for the donation they made to the firm under Section 80G of the Income Tax Act of 1961.
What are documents required for Section 8 company?
The documents required for Section 8 Company registration include the Memorandum and Articles of Association, identity proof, address proof, PAN card of the proposed directors, and address proof of the registered office.
Who is authorized to issue a license under Section 8 of the Companies Act?
The license under Section 8 of the Companies Act is issued by the Central Government via the registrar of companies.
Can a Section 8 company be registered as a public company?
Yes, a Section 8 Company can be registered as either a private limited company or a public limited company.
Does a Section 8 company need GST registration?
Yes, a Section 8 Company is required to obtain GST registration if its annual turnover exceeds the threshold limit specified by the GST authorities.
