As per the Companies Act, 2013, Section 8 Company refers to a corporation that aims to incentivize arts, sciences, sports, education, environment preservation, social welfare, charity, or other similar objectives. 

The ultimate objection of registering Section 8 Company is to incentivize non-profit goals such as trade, arts, commerce, education, charity, environment protection, sports research, social welfare, etc. Also, there is no compulsion of securing minimum paid-up capital to set up such a company. To register a Section 8 entity, at least two directors are required. 

Key points regarding the Section 8 Company

1. In India, an NGO can be registered under the Registrar of Societies or a Non-profit entity under the Section 8 Company of the Company Act, 2013.

1. The profit generated by the section 8 companies cannot fulfil objectives other than charitable purposes. Further, such profit cannot be allocated to the shareholders.

1. A section 8 company is similar to the Section 25 Company under the erstwhile Company Act, 1956. As per the prevailing company Act, Section 15 companies are now acknowledged as Section 8. 

1. A Section 8 entity is bound to comply with the provisions of the Companies Act, 2013. In view of this, these entities are mandated to administer the books of account file returns with ROCs.

1. Such companies have no right to alter the charter documents like AOA and MOA without the government's consent. Further, they must also comply with the GST laws and IT Act.

Incorporation process

Following is the detailed process of incorporation for Section 8 Companies in India; 

Step 1: Secure DSC from the MCA authorized agencies  

DSC, i.e. Digital Signature Certificate, serves as a digital tool for signing various e-forms and scanned copies of documents. It is primarily used by the company's authorised signatory, such as the Director, partners, managing directors, etc. In this case, the proposed directors of the section 8 companies are required to secure the DSC for signing essential documentation. 

Step 2: Visit the MCA portal to file Spice+ Form

The next step is to visit the MCA portal and create an account. After that, the applicant must select the Spice+ form option from the Service section located on the top menu of the home page. This would lead the applicant to a brief e-form which entails the two vital parts, A and part B.

Part A helps the applicant to register the proposed company name, and PART B offers the given services:

1. Company Incorporation

1. DIN allotment 

1. PAN allotment

1. TAN Allotment 

1. GSTIN Allotment 

1. EPFO Allotment

1. ESIC Allotment

1. Opening of Bank Account for the Company

1. Profession Tax Registration (if applicable)

 Step 3: Upload mandatory documents and submit the Form

Upload the required documents mentioned above and make your way to the payment section to submit the standard fees. Once done, tap on the submit button to wrap up the application submission formalities.

Created & Posted by Pooja

Income Tax Expert at TAXAJ

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