As we had mentioned in our previous article, there are three ways to start a trust/ NGO. They are setting up a trust under Indian Trust Act, setting up a society under Cooperative Societies Act or Section 8 Company under Companies Act 2013.
Erstwhile Section 25 Company (under Companies Act, 1956) is now called as a Section 8 Company.
What is Section 8 Company (Section 8 of Companies Act 2013)?
A Company which has main objective as Promotion of arts, science, commerce, sports, education, religion, charity or such other objectives, uses its profit for promotion of its objectives and doesn’t pay any dividend to its members. In simple words it is a Company with no intention to make a profit.
Who can form a Section 8 Company?
Any individual or association of persons can form a Section 8 Company.
How many people are required to form section 8 Company?
Minimum 2 people are required to set up a Section 8 company.
What are the steps to be followed for registration?
a. One has to take a Digital Signature certificate for all the Directors.
b. Director identification number to be obtained for all the Directors.
c. Name approval to be obtained from Registrar of Companies (ROC).
d. An application to be made to ROC for obtaining a License from a ROC.
e. After obtaining a License from ROC, Forms to be filed for obtaining an Incorporation certificate.
What are the details/Documents to be produced for obtaining a License from ROC?
Basically one has to furnish his profile, proposed activities to be made in company, any previous experience in Charitable/social work etc. Based on Merit of documentation, ROC will issue a license.
How many days does it take to get a Certificate?
Usually it takes 30 days to get a Certificate.
Tax provisions on Section 8 Company?
If Section 8 Company obtains 12A registration from Income tax Department, the amount received (donation) by Section 8 Company shall be exempted from tax. The trust can also obtain 80G registration from Income Tax, so that the donors can get deduction from their Income Tax liability.