Exemptions Availed to The Section 8 Company Registration

Section 8 Company registration is a registered charitable institution with the objective of promoting science, commerce, art, sports, religion, research, etc. Section 8 company is governed by the Ministry of Corporate Affairs (MCA).

It requires a license from the Central government. There is a misconception that the said company is formed for ‘not for profit’. However, the fact is that there is no restriction for a company under section 8 to earn profit while carrying on its objects.

Although, it cannot distribute the profit to its shareholders the profit earned and the profits have to be reinvested in furthering its objects. In this blog, we will be discussing various exemptions available for the company under section 8.

What Are the Various Exemptions Availed to The Section 8 Company Registration?

The list of companies registered under section 8 of companies act, 2013 is as follows:

1. The Company Secretary in the prescribed section of the Act is not applicable to companies under Section 8. Thus, they are not required to appoint a qualified CS professional as its Company Secretary.

2. The requirement of having a minimum paid-up share capital for incorporating a private or public company has been abolished vide the Companies (Amendment) Act, 2015.

3. A company under section 8 is not required to appoint an Independent Director. The list of section 8 companies in India 2021 is maintained by the MCA.

4. For Section 8 Company registration; Directorship will not be counted for calculating the ceiling with respect to a maximum number of directorships as prescribed under the act.

5. A nomination and remuneration committee nor a stakeholders relationship committee is not applicable for these companies.

6. A general meeting can be held by giving notice of not less than 14 days instead of 21 days. You can download section 8 of companies Act, 2013 bare act from google.

7. The provisions relating to the recording of minutes of general meetings, board meetings, and other resolutions are not applicable to a company under section 8.

8. A firm can become a member of Section 8 Company registration. The entire list of section 8 companies in India 2022 is updated and displayed on the MCA website.

9. It is exempted from the applicability of secretarial standards as well.

10. A company under section 8 is not entitled to conduct four meetings every six calendar months. It allows conducting only one meeting in the said timeline.

11. Resolution relating to the borrowing of monies, investing the funds of the company and providing loans or security or guarantee can be passed by circulation.

Exemptions Available Under Income Tax Act, 1961

1. A company under section 8 is exempt from paying stamp duty applicable to other companies. The charges for stamp duty are comparatively less for them.

2. The donors of Section 8 Company registration can claim a 50% rebate for donations made by them.

3. If a section 8 entity is registered under section 12AA of the Act, its profits shall remain untouched from any tax implication.

4. The central government releases some compliance that releases tax burden every year from these companies.

Exemptions Available Under Indian Stamp Act, 1899

1. Stamp duty on MOA and AOA of the section 8 entity or any increase in share capital is regulated by Indian Stamp Act, 1899.

2. States like Maharashtra, Delhi, and others has reduced rates for stamp duty on AOA/MOA or an increase in the share capital of the company.

Explain The Process of Section 8 Company Registration

Section 8 entity is similar to a trust or society, except a company under Section 8 is registered under the Central government’s ‘Ministry of corporate affairs’ whereas trusts and societies are registered under State government regulations.

The process of registration of a company under Section 8 is as follows:

• At least two people are required for registering the company
• Obtaining Digital signatures of the First directors
• Obtaining DIN for the First directors
• After getting the proposed Name approval from RUN services
• Drafting of Memorandum of Association and Articles of Association along with other documents.
• Filing of E-Form SPICe+ 32 for Section 8 Company registration

The following attachments to SPICe 32 are given below:

• Memorandum of Association
• Articles of Association
• Declaration in Form INC-14 by professionals in practice.
• Form INC-15 for Declaration by the applicant
• An estimated figure of annual income and expenditure in the future of the company for the succeeding three years.
• Consent and declaration by the directors in Form DIR-2.
• Form INC-9 for Self-declaration by first subscribers
• PAN card and Aadhar card of subscribers and directors
• Registered office proof like NOC from the owner
• Latest copy of utility bill such as electricity bill
• Getting a Certificate of Incorporation from ROC.

Companies under Section 8 must contain words like Foundation, Society, Association, Club, Charities, Academy, organization, Federation, Institute, Development, and many more. You can download section 8 of Companies Act, 2013 pdf from the website.

What Are the Documents Required for A Section 8 Company Registration?

The list of required documents for section 8 company incorporation is as follows:

• Identity Proof: Copy of PAN card for all subscribers and directors to the MOA
• Address proof: Voter ID or passport or driving license or Aadhar card or Telephone bill or Electricity bill which is not older than 2 months.
• Latest bank statement
• Passport size photographs
• E-mail Id and mobile number of company and members.
• Copy of rental agreement.
• Utility bills of the registered office
• NOC certificate by the owner for using his premises.
• Consent by director of the company in Form DIR-2
• Director’s interest in other companies/LLPs, if any.

A Section 8 Company registration has to comply with the annual compliances like other companies, in case of non-compliance, the company will be treated as a dormant company and it can be struck off from the registrar.

What Is the Benefit of Section 8 Company?

The advantages of section 8 are given in the following points:

1. Easy Process:

Forming a company under company law is an easy process due to the online incorporation through the MCA portal.

2. Minimum capital requirement is not required:

The companies under Section 8 are not require to have a minimum amount of share capital. It is also licensed by the central government under section 8 of the company act.

3. Stamp duty registration is exempted from Section 8 Company registration:

When the company incorporation process is carried out, there is a minimal amount of stamp duty charged by the company.

4. Tax Benefits:

Tax deduction benefits under Section 12AA (tax exemption) and u/s 80G of the Income-tax Act to the donors of the company.

5. Gives the company better credibility and flexibility.

Conclusion

A company under Section 8 can be incorporated for objectives of promoting arts, commerce, medicines, education, sports, charity, social welfare, environment protection, or any similar kind of goal. There are many institutions whose objective is to serve society and cater to good quality services with the best possible efforts in remote areas where the government is unable to reach.