What are the Advantages of Section 8 Company?

The Companies Act of 2013 serves as a comprehensive legislative framework outlining various forms of company incorporation in India. It encompasses diverse entities such as Private Limited Company, Public Limited Company, Section 8 Company, Limited Liability Company, and One Person Company, among others. Section 8 Company is one such entity incorporated under the provisions of the Companies Act of 2013. The following highlights the numerous advantages associated with Section 8 companies in India.

If you aspire to establish your own Section 8 company or NGO, feel free to contact us for assistance in incorporating your company as an NGO.

Advantages of Section 8 Company

Section 8 companies, commonly known as not-for-profit organizations, are incorporated under Section 8 of the Companies Act, 2013, and offer several advantages:

  1. Charitable Objectives: Section 8 companies are dedicated to promoting art, commerce, education, charity, religion, and various social welfare activities. They can engage in any legal activity falling within this scope without the aim of generating profits.
  2. Tax Benefits: Enjoying tax exemption under Section 12A and 80G of the Income Tax Act, 1961, Section 8 companies are relieved from paying taxes on their income. Moreover, donors contributing to these companies are eligible for tax deductions.
  3. Limited Liability: Members or shareholders of Section 8 companies benefit from limited liability, shielding them from personal responsibility for the company’s debts. Their liability is confined to the extent of the shares they hold.
  4. Perpetual Existence: Section 8 companies maintain perpetual existence, unaffected by changes in membership or shareholder composition. This ensures the continuity of the company’s social welfare initiatives regardless of ownership shifts.
  5. Greater Credibility: Registration under the Companies Act lends Section 8 companies enhanced credibility within the recognized legal framework. This credibility facilitates attracting funding and grants from diverse sources.
  6. Easy Transferability of Ownership: The shares of Section 8 companies can be effortlessly transferred, streamlining the process for members or shareholders seeking to exit the organization.
  7. Easier to Raise Funds: Section 8 companies can raise funds through donations, grants, and other sources without the necessity for collateral or security. This accessibility simplifies the fundraising process for their social welfare endeavors.

For further insights, you can also explore the features of a Section 8 company.

How to Register a Section 8 Company

To incorporate your Section 8 company, the submission of valid documents, including identity proof, address proof, details of directors, and other pertinent records, is essential through the MCA portal. However, navigating this process can be intricate, and seeking professional assistance for company registration is advisable.

Our team at Auriga Accounting is ready to assist you in registering your company at a minimal cost and within a few days. For the registration of a Section 8 company, specific documents such as a Digital Signature Certificate, details of directors, director identification number, MoA, AoA, etc., are required.

Upon furnishing all the necessary documents, the next step involves submitting the requisite fees on the MCA portal to conclude the process. Subsequently, your Section 8 company registration will be finalized within 7–10 working days.