Section 8 Companies: Harshal Arun Lahamge

A Section 8 company, also known as a Non-Profit Organization (NPO), is a type of company that is established for charitable or non-profit purposes. It is regulated under Section 8 of the Companies Act, 2013, and is exempt from paying income tax.

Here is a closer look at Section 8 companies and how they work in India:

Objectives :

Section 8 companies are established with the primary objective of promoting charitable or non-profit activities. These activities can include promoting arts, science, education, religion, social welfare, or any other useful object that is beneficial to the community.

Partnership :

A partnership is a business owned by two or more individuals who share profits and losses. Partnerships can be general partnerships, where all partners have equal responsibility for the management of the business, or limited partnerships, where some partners have limited liability and are not involved in the day-to-day management of the business.

Structure :

Section 8 companies are structured like any other company, with a board of directors, members, and shareholders. However, they are prohibited from distributing any profits or dividends to their shareholders. Any profits earned by the company must be used for promoting its charitable objectives.

Registration :

To register a Section 8 company, the promoters must apply to the Registrar of Companies (ROC) with the company’s memorandum and articles of association. The ROC will review the application and may ask for additional documents or information before granting approval.

Tax Benefits:

Section 8 companies are exempt from paying income tax and are also eligible for various tax benefits and exemptions. They can receive donations from individuals and corporates, and these donations are tax-deductible under Section 80G of the Income Tax Act, 1961.

Compliance :

Section 8 companies are required to comply with various regulatory requirements, including filing annual returns and maintaining proper books of accounts. They must also obtain various licenses and registrations, depending on the activities they undertake.

Section 8 companies play an important role in promoting charitable and non-profit activities in India. They are a popular option for individuals and organizations who want to make a positive impact on society. By providing tax benefits and exemptions, the government has encouraged the formation and growth of Section 8 companies, and they are expected to continue playing an important role in India’s social and economic development.