Section_8_Company


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SECTION 8 COMPANY

A Non-profit Company or Section 8 Company is a Company which:

Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object
Intends to apply its profits, if any, or other income in promoting its objects; and
Intends to prohibit the payment of any dividend to its members.
Exemption from Stamp Duty.
Tax deductions to the donors of the Company u/s 80G of the Income Tax Act.
Section 8 Companies can be formed with or without share capital, in case they are formed without capital, the necessary funds for carrying the business are brought in form of donations, subscriptions from members and the general public.
Section 8 Companies are not required to add suffix Limited or Private Limited at the end of their name.
A Section 8 Company has more credibility as compared to any other Non-profit organization structure like Trust or Society.

Advantages

Separate Legal Entity
Tax Benefits
Easy Transferability
Minimized Share Capital
Owning Property

Disadvantages

Strict Legal Compliance.
Use of Profits
No profit distribution
Zero Benefits
Alteration in MOA and AOA

Benefits of Section 8 Company Registration:

Exemption from Stamp Duty.
Tax deductions to the donors of the Company u/s 80G of the Income Tax Act.
Section 8 Companies can be formed with or without share capital, in case they are formed without capital, the necessary funds for carrying the business are brought in form of donations, subscriptions from members and the general public.
Section 8 Companies are not required to add suffix Limited or Private Limited at the end of their name.
A Section 8 Company has more credibility as compared to any other Non-profit organization structure like Trust or Society.

Minimum requirements for Section 8 Company incorporation

1. Memorandum of Association in Form INC-13
2. Articles of Association; (No Specified format)
3. Consent and Declaration by first Directors in form DIR-2
4. Affidavit by the first subscriber in form INC-9
5. Self-attested copies of KYC documents of Shareholders / Director (PAN, Aadhar& Bank Statement (Not older than 2 months)
6. Latest one colour photograph of all Shareholders / Director
7. Proof of Registered Office Address (Electricity Bill / Phone Bill / Water Bill) (Not older than 2 months)
8. NOC from the owner of the premises
9. Consent from all the Directors in Form No. DIR-2
10. The license issued in form INC-16

Compliance required by a Private Limited Company

GST Return: Every registered person shall furnish the details of outward supplies and inward supplies of goods or services or both during a tax period on or before the due date as specified by the government on the common portal.

Accounting: Every section 8 company shall prepare and maintain proper books of accounts and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company. Accounting is necessary for the statutory audit, Annual filing, GST Return, IT return, Tax audit, GST Annual Return, GST audit and other information or documentation. which is mandatory once you start your Company. These books of accounts shall be audited by the auditor appointed by the company.

Statutory Audit: Every Section 8 Company shall appoint an individual or firm as an auditor for auditing of books of accounts for each financial year, which is prepared and maintained by the company, irrespective of its turnover or nature of business or capital of the company.

ROC Annual filing: Every section 8 is required to file the annual accounts and annual return as per The Companies Act, 2013 within 30 days and 60 days respectively from the conclusion of the Annual General Meeting.

Income Tax Return: Income Tax Return is the form in which assessee files information about his Income, expenses, deduction, directorship, shareholding or other information and tax thereon to the Income Tax Department. Partnership firm file income tax return of every financial year on or before the due date in forms ITR 6

Income Tax Audit:

A person carrying on business, if his total sales, turnover or gross receipts in business for the year exceeds Rs. 1 crore. This provision is not applicable to the person, who opts for presumptive taxation scheme under section 44AD and his total sales or turnover doesn't exceed Rs. 2 crores.

Note: w.e.f. Assessment Year 2020-21, the threshold limit, for a person carrying on business, is increased from Rs. 1 Crore to Rs. 5 Crore in the case when cash receipt and payment made during the year does not exceed 5% of total receipt or payment. In other words, more than 95% of the business transactions should be done through banking channels.

A person carrying on profession, if his gross receipts in profession for the year exceed Rs. 50 lakhs.

The tax audit reports conducted by a registered chartered accountant are to be presented in a prescribed format. Under section 44AB of the IT Act, the form that is prescribed for the audit report is Form No. 3CA and to be reported in Form No. 3CD of the prescribed.