The section 8 company has been established with the purpose of promoting arts, science, sports, research, education, religion, social welfare, and environmental protection through the promotion of arts, science, sports, and research.
A Section 8 Company is a not-for-profit organization that is registered under the Companies Act, 2013. The primary objective of a Section 8 Company is to promote social welfare, education, art, science, and other charitable activities. These companies are exempted from paying dividends to their shareholders, and any profits earned are used for the betterment of society.
Benefits Related to Taxation
Section 8 Companies enjoy several benefits related to taxation. They are exempted from paying income tax on their profits if they are used for charitable purposes. Additionally, donations made to Section 8 Companies are eligible for tax deductions under Section 80G of the Income Tax Act, of 1961.
ITR for Section 8 Company Under the Income Tax Act of 1961
Section 8 companies must file an income tax return (ITR) under Form 7. This form is used to report the income and expenses of the company, as well as the donations that it has received.
Eligibility Criteria For Filing A Form 7 ITR For Section 8 Company
In order to be eligible to file Form 7, a Section 8 company must meet the following criteria:
- It must be registered under Section 8 of the Companies Act, 2013
- It must have a charitable purpose
- It must not distribute any profits to its members
- It must file an annual return with the Registrar of Companies
Exemptions & Reliefs For Section 8 Company
In addition to the tax benefits mentioned above, Section 8 companies also enjoy a number of other exemptions and reliefs under various rules, regulations, and acts. These include:
- Section 178 of the Act is not applicable to Section 8 Company.
- If a Section 8 Company got registered under Section 12AA (tax exemption) of the Income Tax Act, its profits shall be entirely exempted, and no tax will be levied on the company.
- Relief from stamp duty on certain documents
- Deductions for contributions made by donors under Section 80G of the Income Tax Act, 1961
Indian Stamp Act Of 1899: ITR For Section 8 Company
Most states, including Delhi and Maharashtra, offer special rates for stamp duty on MOA/AOA of Section 8 companies or increases in authorised share capital.
Regulation Act & Foreign Contribution: ITR For Section 8 Company
In order to comply with the FCRA and receive overseas donations or funding, a Section 8 Company needs to register under the FCRA. This registration makes the company eligible to receive such overseas contributions
Conclusion:
Section 8 companies are subject to a number of tax benefits and exemptions. However, it is important to be aware of the specific requirements that must be met in order to qualify for these benefits.
Suppose you are considering setting up a Section 8 company. In that case, it is advisable to consult with a tax advisor from Vakilsearch to ensure that you are in compliance with the relevant regulations.
FAQs
Which ITR is applicable for Section 8 companies?
Section 8 companies and other non-profit organizations are required to submit the ITR-7 form.
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