A Section 8 company is a type of non-profit organization registered under the Companies Act, 2013 in India. It is formed to promote charitable activities such as education, arts, science, sports, social welfare, and environmental protection. Unlike other companies, a Section 8 company does not distribute profits to its members but instead reinvests them in furthering its objectives.
Registering a Section 8 company provides various benefits, including tax exemptions and credibility. However, the process involves multiple legal and compliance requirements. This article covers the Section 8 company registration process, necessary documentation, eligibility criteria, and compliance obligations. Additionally, we will discuss the impact of GST Cancellation and the process for How to cancel GST Registration if required.
What is a Section 8 Company?
A Section 8 company is a legal entity dedicated to social welfare, operating without the intention of making profits. It is similar to a trust or society but enjoys the corporate status of a private limited or public limited company.
Key features of a Section 8 company include:
• Operates for charitable or non-profit purposes.
•No distribution of dividends to members.
• Enjoys tax exemptions under the Income Tax Act, 1961.
•Requires approval from the Central Government for incorporation.
Eligibility for Section 8 Company Registration
To register a Section 8 company, the following eligibility criteria must be met:
1. Purpose of Formation – The company should be established for social welfare, charity, environmental protection, or similar causes.
2.Profit Reinvestment – Profits should be used for promoting the objectives of the company, not for member benefits.
3.Minimum Directors & Members – At least two directors for a private limited company and three for a public limited company.
4. Registered Office in India – A valid address for official correspondence.
Section 8 Company Registration Process
The Section 8 company registration process is regulated by the Ministry of Corporate Affairs (MCA). Follow these steps to complete the registration:
Step 1: Obtain Digital Signature Certificate (DSC)
• Directors must obtain a DSC from a government-authorized agency.
• The DSC is required for online filing of forms.
Step 2: Apply for Director Identification Number (DIN)
• Directors must apply for a DIN using Form DIR-3.
• DIN is mandatory for individuals planning to be directors in a Section 8 company.
Step 3: Name Reservation
• Submit an application in Form RUN (Reserve Unique Name) on the MCA portal.
• The company name should indicate the purpose (e.g., "Foundation," "Trust," "Association").
• The name should not be identical to an existing registered entity.
Step 4: Draft MOA & AOA
• Memorandum of Association (MOA) and Articles of Association (AOA) must be drafted.
• These documents define the objectives and operational rules of the Section 8 company.
Step 5: Apply for Section 8 Company License
• File Form INC-12 with the MCA to obtain a license.
• Attach MOA, AOA, estimated annual income & expenditure, and other supporting documents.
• The Central Government reviews the application and grants a license upon approval.
Step 6: Incorporation Application (Spice+)
• File Form Spice+ (INC-32) for company incorporation.
• Attach the license obtained in the previous step.
• Submit details of directors, registered office address, and other required documents.
Step 7: Obtain Certificate of Incorporation
• Upon approval, the Registrar of Companies (ROC) issues a Certificate of Incorporation.
•  This certifies the legal existence of the Section 8 company.
Compliance Requirements for a Section 8 Company
Once registered, a Section 8 company must comply with legal and tax regulations, including:
1.Annual Filing – File annual financial statements and reports with the MCA.
2. ncome Tax Returns – File ITR annually to claim tax exemptions.
3. GST Registration – If turnover exceeds ₹20 lakh (for services) or ₹40 lakh (for goods), GST registration is required.
4.No Dividend Declaration – Profits must be used for the company’s objectives.
GST Cancellation for Section 8 Companies
A Section 8 company may need to cancel its GST registration under certain circumstances. GST Cancellation applies when:
• The company no longer exceeds the GST turnover threshold.
• t ceases operations.
• It undergoes restructuring or merger.
How to Cancel GST Registration?
To initiate Cancellation of GST Registration, follow these steps:
1.Log in to the GST Portal – Go to www.gst.gov.in and log in with credentials.
2. Steer to the Cancellation Section – Select ‘Services’ → ‘Registration’ → ‘Application for Cancellation’.
3.Fill Out GST REG-16 Form – Provide the reason for cancellation and upload necessary documents.
4.Verification & Submission – Submit the application and complete verification via OTP or DSC.
5. Approval by Authorities – Once approved, the GST registration is canceled.
If a Section 8 company plans to restart operations or engage in taxable activities, it must reapply for GST registration.
Benefits of Registering a Section 8 Company
Registering a Section 8 company offers numerous advantages, including:
1.Tax Exemptions – Companies qualify for benefits under Section 80G and Section 12A of the Income Tax Act.
2.Credibility & Legal Recognition – It enjoys higher credibility compared to NGOs and trusts.
3. Limited Liability Protection – Directors are protected from personal liability.
4.No Minimum Capital Requirement – Unlike other companies, there is no mandatory minimum capital.
5. Exemption from Stamp Duty – No stamp duty is required for registration.
Conclusion
A Section 8 company is an excellent option for those looking to establish a non-profit organization with legal recognition and tax benefits. The Section 8 company registration process involves obtaining approvals from the MCA and complying with legal requirements.
Additionally, if the company no longer requires GST registration, insight How to cancel GST Registration is critical. The Cancellation of GST Registration ensures compliance with tax regulations and prevents unnecessary tax liabilities.
By following the correct procedures and maintaining compliance, a Section 8 company can operate effectively and achieve its mission of contributing to society. If you need guidance on Section 8 company registration or GST Cancellation, consulting a professional is highly recommended.