Section 8 Companies are a type of Non-Governmental Organizations in India and are registered under the Companies Act 2013. They are not-for-profit organizations that are set up for charitable purposes such as promoting commerce, art, science, religion, charity, and other objects of public interest. The Ministry of Corporate Affairs regulates section 8 companies. They must comply with specific rules and regulations, such as having at least three directors, a Board of Directors, and an annual general body meeting. They must also file an annual return with the Registrar of Companies. Lastly, they are subject to the same regulatory framework as all other companies in India but are exempt from certain sections of the Companies act 2013.
Non-Governmental Organizations (NGOs) are legally registered entities created by individuals, groups, or organizations not affiliated with any government. Individual donations, corporate sponsorships, grants, or a combination of all three usually fund them. NGOs can be found in almost every sector of society and can have a variety of purposes, including public service, advocacy, research, or humanitarian work. They work in many different ways, such as providing direct services, raising awareness, advocating for policy change, researching and developing new solutions, and engaging with the public and other stakeholders. NGOs are often seen as a force for positive change, providing more direct and flexible support, challenging injustice and promoting human rights, and providing vital services in areas where government or other organizations are unable to.
Section 8 companies are typically formed to serve philanthropic objectives such as the promotion of art, culture, science, charity, etc. These companies encounter minimal legal hindrances regarding availing of legal status via registration. But the same is not true for the post-registration phase, as these companies have to abide by various legal implications that act as a barrier. No profit allocations to members and less stability are some common disadvantages of section 8 Company. However, on the taxation front, these companies have some advantages.
Since Section 8 companies are more of a charitable institution, they have access to the various exemptions available under the IT Act. These companies are qualified to access multiple tax benefits and a tax cut.. Some of the key benefits of section 8 company registration in India include:
