If any company wants to the promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object then it can register itself under section 8 of companies Act 2013. This kind of company is called as Section 8 company. The companies registered under section 8 will be treated as limited companies without the addition to its name limited. Section 8 Company is most popular form of NGO in India. It is easy to register, run or manage.
The income of the Section 8 Company must be used to promote only charitable objects and cannot pay any dividend to the members of the company. The profits earned by a NGO Company (Section 8 Company) are directed towards these purposes, not paid as dividends among its members. However, unlike the Society Registration, the NGO Registration that is Section 8 Company formation is dictated by the Companies Act. Therefore, it is the MCA that is responsible for the formation of this type of company.
The process of registration is the same for Section 8 Company.
Zero Stamp Duty
A Section 8 company do not have to pay stamp duty on the AoA and MoA of the private or public limited company which other companies surely pays.
Separate Legal Entity
A Section 8 Company also holds its own identity like other companies structures, and has its own separate legal standing from its member. A Section 8 Company also has a perpetual existence.
A Section 8 Company can take foreign contributions from any country after getting approval of FCRA.
Since Section 8 companies are a non-profit organization, so they leverage the exemption from the provision of income tax. They employ many perks under section 80G of the Income Tax Act.
Exempted from any name:
In opposes to other companies who are under obligation to use their company’s name as ‘limited company’, section 8 companies get exempted from the use of any title.
A Section 8 Company is eligible to take CSR Funding.