In India, there are several legal structures available for NGOs or Non-Profit Organizations, including Trusts, Societies, and Section 8 Companies. Among these, Section 8 Companies stand out due to their uniform regulation under the Companies Act, 2013, making them closely monitored and recognized internationally. This article aims to provide a step-by-step guide to incorporating a Section 8 Company, highlighting its significance and benefits.
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Understanding Section 8 Company
A Section 8 Company, also known as a Non-profit Company, is incorporated with the objective of promoting various social, charitable, educational, or environmental causes. Unlike other forms of organizations, such as Trusts or Societies, a Section 8 Company prohibits the distribution of dividends to its members, ensuring that any profits earned are reinvested into furthering its objectives.
Procedure for Registration
1. Application for Name Availability:
The process begins with applying for name availability through the web-based form (Spice Part-A) on V3 portal. The proposed name must include terms like Foundation, Association, Federation, etc., indicative of its non-profit nature. A fee of Rs. 1000 is charged for this application, and once approved, the name remains valid for 20 days.
2. Obtaining Digital Signatures:
The next step involves obtaining Class 3 digital signatures for the first directors and subscribers, which are necessary for filing incorporation forms with the Central Registration Centre (CRC).
3. Preparation of SPICe Part-B Form:
Once the name is approved and necessary documents are prepared, the SPICe (Simplified Proforma for Incorporating Company Electronically) Part-B form is filed. Required attachments include Proof of Office Address, NOC for use of office Address, Director / Subscriber ID and Address Proff and 3 Years future Projections of NGO
4. Preparation of Other Forms:
After Submitting the Spice Part-B, Other forms (Agile Pro, INC-13 – eMOA, INC-31 – eAOA and INC-9) is visible on the dashboard. Prepare all the forms one by one and submit the forms.
5. Downloading and submission of the forms:
After submitting all the forms i.e. Spice – Part-B, Agile Pro, INC-13, INC-31 and INC-9, Download all the forms and applying required DSC of the directors / subscribers in each form and upload the forms on the MCA V-3 Portal. After uploading all the forms, file option will become visible. After that file all the forms with the CRC and make the payment of PAN/TAN and Stamp duty. The fees for PAN/TAN is 143 and Stamp duty is depends upon the ROC. If you select ROC Kanpur than the Stamp duty is 1010/- and in you select ROC Mumbai than the stamp duty is Rs. 100/-. Make the necessary payment. After making the payment, the form will be checked by CRC and if found correct than approved by the CRC.
Benefits of Section 8 Company Registration
– Exemption from Stamp Duty: Section 8 Companies enjoy exemption from stamp duty on various transactions, reducing compliance costs.
– Tax Deductions for Donors: Donors contributing to Section 8 Companies are eligible for tax deductions under Section 80G of the Income Tax Act, encouraging philanthropic support.
– Flexible Capital Structure: Section 8 Companies can be formed with or without share capital, allowing them to raise funds through donations, subscriptions, or grants.
– No Requirement for “Limited” Suffix: Unlike other company types, Section 8 Companies are not required to add “Limited” or “Private Limited” to their names, enhancing their credibility and recognition.
Conclusion
Incorporating a Section 8 Company in India involves a meticulous process governed by the Companies Act, 2013. Despite the regulatory requirements, the benefits and credibility associated with Section 8 Companies make them a preferred choice for organizations dedicated to social welfare and charitable activities. By following the prescribed procedure and adhering to regulatory norms, aspiring non-profit entities can establish themselves as Section 8 Companies, contributing positively to society while enjoying various statutory benefits.
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