Advantage of a Non-Profit Organization as a Section 8 Company

  • February 18, 2022
  • Dushyant Sharma
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While starting a non-profit organization and helping people is a noble endeavour, without a proper structure, such a dream can’t survive for long. Therefore, the ministry of corporate affairs was kind enough to create give a “company-like” infrastructure that can handle non profit ideals. Known as Section 8 Company, it has paved a way for several do-gooders to come forward and make actual impact in this world.

But why choose a Section 8 Company? Are there any advantages to it other than giving a marketable structure to a non-profit organization? Well, yes there are and through the course of this article, we are going reveal them to you so that you can actually create a company of heroes to help the society.

What is a Section 8 Company?

A Section 8 Company is a form of business entity in India whose purpose is to promote the fields or science, arts, commerce, religion, environment conversation, social welfare and other philanthropic causes. The profits acquired by such a company are not meant to be divided among the members/directors, but are used to invest in the aforementioned causes.

Why make your Non-Profit Organization into a Section 8 Company?

A Section 8 Company doesn’t only give structure to the altruistic dream you have, it also gives you the benefits you need to help the most number of people. Following are the benefits of Section 8 Company registration:

  1. Tax benefits: The government provides several tax benefits to a Section 8 Company. Following are some of the sections under which the company enjoys them:
    1. Section 80G: Under section 80G, the donors of a section 8 company can ask for rebate of upto 50% of the donations made.
    2. Section 11: Under Section 11 of Income tax Act, Section 8 Companies are permitted deductions of expenditure from income.
  2. No minimum capital required: even if you don’t have any money (other than the registration fees), you can easily setup your Section 8 Company.
  3. A Separate Person: Once incorporated, a Section 8 Company becomes an entity which is separate from its directors.
  4. Marketable: If your organization has a legal stature of a Section 8 Company, it automatically becomes more credible in front of people.
  5.  No Stamp duty required for registration: You don’t have to bear the cost of stamp duty of Section 8 Company registration.

To put the above legal jargon in simpler terms: Evolving a non-profit organization into a Section 8 Company will make it bigger, better and more trusted.

But one question still remains: how to evolve your organization into a Section 8 Company?

The process of Registering a Section 8 Company

The Section 8 Company registration process is easy to say the least. As the process is largely online, most business registration experts can help you establish your company within a week or 10 days at most:

  1. Decide the name of your Section 8 Company: Choose a unique name that tugs the heartstrings of the people.
  2. Furnish the documents required: Furnish the following documents for section 8 company registration:
    • ID proof, address proof and photo IDs of the directors/members
    • Address proof of the registered office space. If you don’t have a traditional office to start your non-profit organization in, you can choose your own home as the office.
    • Digital Signature Certificate
    • Director Identification Number
  3. Draft MOA and AOA: MOA or Memorandum of Association specifies the objective of your Section 8 Company. The AOA or Article of Association specifies the rules and regulations of your Section 8 Company.
  4. File the application of Section 8 Company Registration: Once you’ve furnished the documents and drafted the legal articles, all you need to do is consult a business professional. They are going to help you file and submit your application online at the MCA website.
  5. Certificate of Incorporation: After the Registrar receives your application, they are going to scrutinize it for errors. If they find any issue with your application, you’ll be notified and will then have to re do the whole process. If they accept your application, you’ll receive certificate of incorporation, a document proving that your Section 8 Company is established.

If you still have queries about Section 8 Company and are thinking if such a company suits your needs, contact our experts. We are always willing, ready and able to assist you with your questions.

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Dushyant Sharma
Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.

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