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Timeline for Section 8 Company Registration

Section 8 company registration generally takes 10 to 14 days, depending on document verification and the availability of required documents.

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2 to 4 days

Unique Name Registration

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3 to 7 Days

Documentation

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7 to 15 Days

Company Incorporation

Section 8 Company Registration- An Overview

Are you looking for an NGO registration or a non-profit organization under the Companies Act, 2013? Well! Section 8 Company Registration can be an excellent choice for you. It is a process of legally establishing a Non-Profit Organization (NPO) that operates with limited liability while working for social causes such as education, arts, commerce, and social welfare. These companies enjoy exemptions, privileges, and special licenses under the Companies Act to support their charitable objectives. It is governed by the Ministry of Corporate Affairs (MCA); on the other hand, an NGO registered as a trust or society is governed by the Registrar of State under the State Government.

Corpfilings eases the process of Section 8 Company Registration by offering complete assistance at every step. Their team helps in drafting the required legal documents, securing digital signatures for electronic filings, and submitting applications to the Registrar of Companies (ROC). They also ensure a smooth approval process, helping organizations obtain their Section 8 license without complications, ensuring full legal compliance.

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Eligibility Criteria to Register Section 8 Company

The eligibility criteria to register Section 8 company are as follows:

At least one director should be a resident of India, or a firm may be a member of the registered company.

Individuals, HUFs & limited companies are eligible for section 8 NGO registration.

The primary objective must be for social welfare, sports promotion, education support, or the upliftment of lower-income groups.

A three-year project plan and vision must be defined for the company.

Two or more persons who will act as Directors or shareholders should fulfil all the compliances and requirements of a Section 8 company registration under the Company Act 2013.

All the profit earned can only be used toward the core objective of the company. However, the surplus can’t be distributed to the stakeholders.

Neither members nor directors can receive profits, either directly or indirectly. Also, the earnings from the company must only serve the purpose of the company.

No remuneration is to be received by the founders, directors, and members. Instead, they must ensure that all the profits go towards the social cause of the NGO.

The members or shareholders must not have any personal financial interest in the company.

A Section 8 company must use the prefix “Foundation”, “Association”, “Society”, “Council”, “Club”, “Charity”, “Institute”, “Organisation”, “Federation”.

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What are the Benefits of Section 8 NGO Registration?

The list of benefits of section 8 NGO registration is as follows:

Legal Identity and Credibility

A Section 8 company registered under the Companies Act, 2013, enjoy the status of a distinct legal identity separate from its members. The said company can buy property, enter into contracts, sue or be sued separately in its name.

Tax Benefits

The most significant advantages of Section 8 NGO registration are cover under the Income Tax Act, 1961. They can apply for 12A registration, which exempts their income from taxation provided the income is used for the company’s objectives. Additionally, donations to the Section 8 companies are eligible for tax deductions under Section 80G.

No Minimum Share Capital Requirement

There is no minimum share capital requirement to register Section 8 company unlike company registration in India

Exemption from Titles like “Private Limited”

There is no requirement to add a word like Private Limited or Limited to the company’s name.

Professional Structure and Governance

The Section 8 companies are managed by a Board of Directors, ensuring professional governance. This includes precise roles and responsibilities for directors and members, transparent decision making, etc.

Ease in Fundraising and Collaboration

Section 8 company registered are one of the top choices for receiving CSR (corporate social responsibilities) funds, international funding, bank loans and credit facilities.

Perpetual Succession

Like any other company, Section 8 company also enjoys a perpetual succession. This means that the company continues to exist even if its directors or members change over time.

Limited Liability for Members

Under Section 8 Company’s Act, the liability of its members is limited to the amount they contributed to the company. However, the personal assets of members remain protected in case of financial difficulties faced by the company.

Flexibility in Operations

Companies registered under Section 8 have more operational flexibility compared to societies or trusts. They benefit from a structured corporate framework, allowing better governance, decision-making, and financial management while still focusing on charitable objectives.

Recognition and Respectability

A Section 8 Company follows a strong corporate governance structure and strict legal compliance, which gives it greater recognition and credibility compared to other non-profit entities.

Simplified Dissolution Process

Dissolving a Section 8 Company is a straightforward process, as clearly outlined in the Companies Act, 2013. Upon dissolution, any remaining assets must be transferred to another Section 8 Company or a similar non-profit organization to ensure continued support for charitable purposes.

Laws Governing Section 8 Company Incorporation

The primary act or law that governs the company under section 8 is Companies Act 2013, given below are the list of laws governing section 8 company incorporation in India:

The Companies Act, 2013

Section 8 of the Companies Act, 2013 allows the formation of companies with charitable objectives such as promoting education, social welfare, religion, art, or science. To establish such a company, one must obtain a license from the Registrar of Companies (ROC). The Section 8 Company Incorporation process is governed by Section 7 of the Act, which involves submitting the Memorandum of Association (MOA) and Articles of Association (AOA). Additionally, Rules 19 and 20 of the Companies (Incorporation) Rules, 2014 lay out the detailed procedures for registration and renewal of Section 8 companies.

Role of the Ministry of Corporate Affairs (MCA)

The Ministry of Corporate Affairs (MCA) is the central authority responsible for regulating Section 8 company incorporation in India. The MCA, through the ROC, reviews all applications and supporting documents to ensure that the proposed company aligns with its stated charitable objectives before granting the license.

The MCA also holds the authority to revoke the license if the company engages in profit-making or fraudulent activities, or fails to adhere to its nonprofit objectives.

Income Tax Act, 1961 and Tax Benefits

Under the Income Tax Act, 1961, Section 8 companies can apply for 12A registration to obtain income tax exemptions, provided their income is used solely for charitable purposes. Donors contributing to such companies are eligible for tax deductions under Section 80G.

Additionally, as per Section 135 of the Companies Act, businesses can allocate their Corporate Social Responsibility (CSR) funds to Section 8 companies, which are considered tax-deductible expenses. Some services provided by Section 8 companies may also qualify for GST exemptions or deductions under applicable laws.

Legal Requirements to Register Section 8 Company

The legal requirements to register section 8 company are as follows:

  • Minimum 2 directors and maximum 200 members are required for a Private Limited Company (as per MCA);
  • Minimum 3 directors are required for a Public Limited Company, with no maximum limit;
  • No minimum paid-up capital is required for Section 8 Company registration;
  • Section 8 Companies are not required to add “Private Limited” or “Limited” in their name;
  • The company must operate solely for charitable or non-profit purposes;
  • The objectives must be clearly stated in the MOA and AOA;
  • Any profits must be reinvested in the organization and cannot be distributed to members;
  • The company is managed by a Board of Directors as per the MOA and AOA;
  • It must comply with the Companies Act, 2013, and maintain proper books of accounts;
  • It must file returns with the Registrar of Companies;
  • Changes to MOA and AOA require Central Government approval;
  • It must also follow the provisions of the Income Tax Act and GST laws;
  • Proposed directors must obtain a Digital Signature Certificate (DSC) from a government-recognized certifying agency;
  • All forms must be submitted online and signed digitally;
  • Directors must apply for a Director Identification Number (DIN);
  • DIN application can be submitted via Form DIR-3 along with the SPICe+ form during registration.

Documents Required for Section 8 Company Registration

The list of documents required for section 8 company registration are as follows:

Documents Needed for Section 8 Company Incorporation

  • Memorandum of Association (MOA)
  • Articles of Association (AOA)
  • Declaration by Directors (INC-9)
  • Financial Statements
  • Affidavits and Declarations (Signed by Chartered Accountant, Company Secretary, Cost Accountant)

Documents for Directors and Members

  • Identity proof (PAN Card, Passport for foreign nationals, etc)
  • Address Proof (Aadhar Card, Voter ID, Passport, Driving License, etc)
  • Residential Proof (Bank Statement, Utility Bill, Mobile Bill)
  • Passport Size Photograph
  • Director Identification Number (DIN)
  • Digital Signature Certificate (DSC)

Documents for Registered Office

  • Ownership Documents (Sale Deed or property papers)
  • Rental or Lease Agreement (if premises are rented)
  • No Objection Certificate (NOC)
  • Utility Bill not older than two months

Other Necessary Documents

  • List of directors and subscribers
  • Draft license application under Section 8
  • Details of work or activities the company intends to undertake

Procedure for Section 8 Company Registration Online

The step-by-step procedure for Section 8 company registration online is as follows:

Obtain Digital Signature Certificate (DSC)

First and foremost, the applicant company must obtain a Digital Signature Certificate (DSC) for the proposed directors. This DSC is required while filing documents online with the Ministry of Corporate Affairs (MCA).

Obtain Director Identification Number (DIN)

The next step is to apply for a Director Identification Number (DIN) for the proposed directors. The DIN is a unique identification number issued by the MCA to individuals who wish to be directors of the company in India.

Reserve the Company Name

A unique name must be reserved with the Ministry of Corporate Affairs (MCA) for the proposed company. The chosen name should not be similar to any existing company name. To complete this process, Form INC-1 needs to be filed.

Application filing for Incorporation

File a form INC-32 along with the Company’s Memorandum of Association (MOA) and Articles of Association (AOA) for Section 8 Company Incorporation.

Obtain a License for Section 8 Company

Once the application for incorporation is approved, next file a Form INC-12 for obtaining the license for Section 8 company.

Obtain a Certificate of Incorporation

Lastly, after obtaining a license, the MCA will issue a Certificate of Incorporation in Form INC-16. This certificate confirms the Section 8 company incorporation.

Post Section 8 Company Registration Compliance Requirements

The list of post section 8 company registration compliance requirements is as follows:

  • A Section 8 company must file or submit annual financial statements and returns with the ROC.
  • Must conduct an audit by a Chartered Accountant.
  • They must maintain transparency by maintaining income records, expenditures and activities to ensure transparency.

Key Points About Section 8 NGO Registration

The key points about Section 8 NGO registration are as follows:

  • In India, NGO registration can be obtained under two options: Registrar of Societies or as a non-profit entity under Section 8 company of the Companies Act, 2013.
  • Profit generated from companies registered under Section 8 can only be used for charitable objectives and cannot be used for other purposes or distributed among the shareholders.
  • Section 8 companies under the Companies Act, 2013 are similar to the erstwhile Section 25 company under the Companies Act, 1956.
  • Section 8 companies must comply with the requirements of the Companies Act, 2013. They must maintain books of accounts, file returns with the Registrar of Companies (ROCs), and comply with GST and Income Tax Act.
  • Any changes made to the charter documents like Articles of Association (AOA) and Memorandum of Association (MOA) require consent from the respective government authority.

Key Points About Section 8 NGO Registration

The key points about Section 8 NGO registration are as follows:

  • In India, NGO registration can be obtained under two options: Registrar of Societies or as a non-profit entity under Section 8 company of the Companies Act, 2013.
  • Profit generated from companies registered under Section 8 can only be used for charitable objectives and cannot be used for other purposes or distributed among the shareholders.
  • Section 8 companies under the Companies Act, 2013 are similar to the erstwhile Section 25 company under the Companies Act, 1956.
  • Section 8 companies must comply with the requirements of the Companies Act, 2013. They must maintain books of accounts, file returns with the Registrar of Companies (ROCs), and comply with GST and Income Tax Act.
  • Any changes made to the charter documents like Articles of Association (AOA) and Memorandum of Association (MOA) require consent from the respective government authority.

Forms Required for Section 8 Company Registration Online

The list of forms required for Section 8 company registration online is as mentioned in the table below:

Name of the Form Purpose of the Form
SPICE+ Application form for a Company Incorporation
INC 12 Application form for License
INC 13 Memorandum of Association
INC 14 Declaration from a practicing Chartered Accountant
INC 15 Declaration from each person making application
INC 16 License to incorporate as Section 8 company
INC 22 Situation of Registered Office
DIR 2 Consent of Directors
DIR 3 Application to ROC to get DIN
DIR 12 Appointment of Directors

Annual Compliances for Companies Registered under Section 8

The annual compliances for companies registered under Section 8 are as follows:

  • Conduct a minimum of two board meetings in a year
  • Maintenance of Books of Accounts
  • Preparation of financial statements
  • Mandatory audit report
  • Income tax return filing
  • Filing of financial statements in Form AOC 4
  • An annual return is to be filed every year with other e-filing forms like MGT 7
  • Additional compliances to fulfil the registrations like 12AA, 80G, etc.

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FAQs on Section 8 NGO Registration

A minimum of eight people is required to incorporate a Section 8 company in India.

Anyone above 18 years of age can register a Section 8 company in India. There are no restrictions on citizenship or residency, meaning even Non-Resident Indians (NRIs) can apply.

Yes, a Section 8 company can be registered online through an MCA official portal for company incorporation.

The list of documents required for registering a Section 8 company is Identity proof, PAN and passport for foreign nationals, and NOC of the landlord (if applicable).

The validity of the Section 8 company in India is for lifetime, provided all compliances and regulations are complied regularly as per the relevant laws and regulations.

A foreign company cannot register a Section 8 company under the Companies Act, 2013, as it does not meet the definition under Section 2(42). Entities looking to establish a Section 8 company must understand these eligibility criteria and limitations to avoid legal issues.

When it comes to taxation, Section 8 companies are also treated like any other company, where the profit generated by the company is taxed at a rate of 30%. However, if the Section 8 company is registered under Section 12AA of the Income Tax, then profits are completely exempt from taxation.

Unlike other types of company registration under the Companies Act, 2013, Section 8 companies have no minimum capital requirement. Their primary objective is social welfare and upliftment rather than profit-making.

Section 8 company registered under the Company Act 2013 though has a status of non-profit making company, but at the same time it is formed to serve a public good such as promoting the arts, science or charity.

The list of benefits of a Section 8 company incorporation is as follows:

  • No minimum capital requirement
  • No stamp duty
  • Separate legal identity
  • Limited liability
  • Exemptions to donors (under Section 12A and 80G of the Income Tax Act, 1961)

The main purpose of the company registered under section 8 company is to promote non-profit objectives such as commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment, and any such objective related to the mention objects.

Any Indian national or Hindu undivided family (HUF) can incorporate a Section 8 Company under the Company Act 2013, provided the primary objective is to promote art and science, sports, charitable activities, education, or provide financial assistance to individuals from a lower income category.

The list of laws that are applicable to an NGO is as follows:

  • Trust under the Indian Trusts Act, 1882
  • Society under Societies Registration Act, 1860
  • Section 8 of Companies Act, 2013

The checklist for section 8 company incorporation in India is as follows:

  • Digital Signature Certificate (DSC)
  • Director Identification Number (DIN)
  • Company Name Approval from the Ministry of Corporate Affairs
  • Registered Office Address
  • Clear details about the company objectives

The checklist post section 8 company registration is as follows:

  • PAN and TAN Application
  • Bank Account Opening
  • Section 12A and 80G Registration
  • GST Registration

The features of Section 8 company are as follows:

    • Non-profit objective
    • A separate legal entity
    • Enhances credibility due to better governance
    • Tax exemptions under Sections 12A and 80G of the Income Tax Act
    • Eligibility for CSR (Corporate Social Responsibility) funding
    • No minimum capital requirement
    • Accountability and transparency

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