Section 8 - Formation of companies with charitable objects, etc.

                                                                                                                                                                                                                                                               BY SUSHMA GOWDA

                          INTRODUCTION

Section 8 of Companies act 2018 Formation of companies with charitable objects is applied for promoting only the objects of company and no dividend paid to the members of the company, It is for non-for-profit purposes only. Earlier it was Section 25 of companies act 1956.

Formation of companies with charitable objects get registered with the Central government.

FORMATION OF COMPANY

Private limited company & Section 8 Company is very Similar to each other.

They shall make an application on FORM INC-32(SPICe)

and Memorandum of Association(MOA) and Articles of Association(AOA) on FORM NO.INC-13

including Declaration FORM NO INC.14 by an Advocate, chartered Accountant, Cost Accountant or Company Secretary in practice that all the information provided in the application is right and Complied with all the rules and regulation All forms must be filed as specified in Company(Registration offices and fees) Rules, 2014.

Company cannot alter the provisions of MOA & AOA until and unless taking the concern of the Central Government.

Section 8 Company Can get Convert in to Company after Complying with Provision of the company.

BENEFITS OF SECTION 8 FORMATION OF COMPANY WITH CHARITABLE OBJECTS UNDER COMPANIES ACT 2013.

1. Under Section 8 of companies act 2013 there is no need of Maximum Paid up Share Capital to Form
2. Section 8 does not require Auditor as it not applicable under the prescribed Section.
3. Tax Exemptions are available in the Case of Sec 8 Company especially in the case of donor.
4. Section 8 Provision Exempt Stamp Duty payments and does not require to affix title.
5. Charitable Object Company is a Separate legal entity and Credibility as compared to other Non-profit Organization such as Trust or Society.
6. Its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object.
7. Section 8 company will controlled by the board of director of the company

DIGITAL SIGNATURE CERTIFICATE (DSC) AND DIRECTOR IDENTIFICATION NUMBER (DIN) APPLICATION DOCUMENTS REQUIRED.

DSC and DIN is required to the Director of the company

To get DSC and DIN following documents are required such as:

PAN Card or Aadhar Card/ Driving License/ Passport/ Election Id etc.

INCORPORATION CERTIFICATE

After getting MOA (Memorandum of Association) AOA (Articles of Association) etc one may get incorporation Certificate after complying with all the laws, rules, regulations mentioned in the Section 8 of the companies Act 2013. It should get signed by the directors and after approval of incorporation application they are provide with RD License, PAN & TAN for the Company.

80G tax benefit

80G tax benefit is provided in the case of Section 8 Company  a certificate that exempts a person from making any donation to a section 8 company, if aggregate of amount you donate is exceeding 10% of total gross income, excess amount will not be considered in tax benefits.

12A registration under Income Tax Act

12A registration is exemption from paying Income tax for all trusts, NGO, and Not-for-Profit organization. 12A Registration is the one time registration. 12 A is not applicable for private or Family Trusts.

FORM 10 A to be filed to get registered under 12 A of Income Tax Act.

FCRA registration under Foreign Contribution Regulation Act, 2010.

FCRA registration any charitable trust, section 8 company receive foreign contribution or donation foreign sources under Section 6(1) of foreign Contribution Regulation Act, 2010. The entity who wants get registered under FCRA registration should have spent At least 1000000rs from last 3 years in its aim and objects.

If the Entity is newly incorporated it can obtain foreign contribution after getting approval from special Activity.

PUNISHMENT FOR CONTRAVENTION

Section 8 company will be punishable with the a fine of 1000000rs to 1crore. If any member, director or officers of the company are liable to punishment with imprisonment up to 3 years and a fine of between 25000 to 25lakhs.