Section 8 Company

SMCSection (8) Company Registration: A non profit organizations can be registered in India as a Society, under the Registrar of Societies or as a Trust, by making a Trust deed. A third option is registration as a section-8 Company under the Companies Act, 2013.

Whether a trust, society or section-8 company, the Income Tax Act, 1961 gives all categories equal treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-profit organizations may claim a rebate against donations made. Foreign contributions to non-profits are governed by FC(R) A regulations and the Home Ministry.

For an organization to be termed as charity it requires Income tax clearances under 12 A Clause of Income Tax Act. Section 2(15) of the Income Tax Act defines ‘charitable purpose’ to include ‘relief of the poor, education, medical relief and the advancement of any other object of general public utility’. A purpose that relates exclusively to religious teaching or worship is not considered as charitable.

According to section 8(1) (a), (b) and (c) of the Indian Companies Act, 2013, a section-8 company can be established ‘for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object’, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members.

Minimum Requirements for Section 8 Company

  • * Minimum two shareholders;
  • * Minimum two Directors (Directors and shareholders can be same person);
  • * At least one Director shall be resident in India;
  • * No Minimum capital required;
  • * Income-tax PAN is a mandatory requirement in case of Indian nationals.