Start Your NGO By Section 8 Company Registration
NGOs in India
An NGO or Non-Governmental Organization is a non-profit or not for profit organization whose objective is to work towards the upliftment of the underprivileged sections of the society. The NGO can have a wide variety of interests of the society in mind. This may include environmental conditions, education, promotion of children’s health and well-being, etc. There are 3 ways to set up NGO registration online in India:
TRUST
One way to register your Non-governmental organization is by incorporating it as a trust. Entities registered as trusts under the NGO registration process generally work for poverty elimination, education and medical relief.
SOCIETIES
Societies are also known as member-base organizations that work for charitable goals. These organizations are almost always run under the power of a governing body or management committee.
SECTION 8 COMPANIES
A section 8 company covers the object of social welfare. It is similar to NGO registration. The organization establishes to promote science, art, commerce, charity, religion, or any other relevant cause for the progress of society.
It is mandatory for all NGOs to apply for NITI Aayog Registration, a government portal that invites all Voluntary Organizations (VOs) / Non-Governmental Organizations (NGOs) to sign up on the portal. The NGO Darpan was earlier managed by the Planning Commission, which has been replaced by NITI Aayog with effect from 1 January, 2015. Therefore, the portal is currently being directed under the aegis of NITI Aayog. The” NITI Aayog Registration Online” facilitates VO/NGOs to get a system generated Unique ID, as and when signed. Along with details like organization’s registration number, organization’s PAN, office’s trustees’ PAN and Aadhaar details etc.
Section 8 Company Registration
Well, when we talk about Section 8 Company, people are a bit confused about Trust, Society and NGO. In short, Section 8 Company Registration, Society Registration, Trust Registration, etc; all these are the level in NGO Registration. They are basically a category of NGO registration which one can opt for. Section 8 company is similar to the NGO registration process.
Section 8 Company is a non-profit organization (NPO) which can be registered as Trust, Society or NGO under Section 8 of the Companies Act 2013. Even section 8 company registration offers more benefits than society registration or trust registration. It is counted for charitable purpose or for non profit business. A license is issued to a section 8 company under the Section 8 Companies Act 2013.
This type of company has greater credibility among charity makers, government departments and other stakeholders. The purpose of registering the company is to promote arts, science, literature commerce, technology, sports, education, social research, social welfare, religion, charity and protection of the environment. There are three main conditions for granting the NGO Registration license under Section 8 company are as follows:
- The charitable purpose the company should make is to promote achievements.
- Income and profits must be used towards these items.
- Non-payment of dividend to the members of the company.
The procedure to register a section 8 company is similar to that of a NGO registration process, trust or co-operative society under the Companies Act 2013.
Why Section 8 Company is better than a trust and society?
The first point to clear the confusion in the minds of people is NGO Registration and Section 8 company registration are no way different from each other. But both are same. Section 8 company is more preferable and trustable because of its reach which can be registered like Private Limited Companies all over India. Trust and Society registration is done at the local level only. It’s better to register your NGO as a Section 8 company at the national level. Let’s take a quick look at the benefits of ‘registration’:
Transparency
A trust is an agreement between parties whereby one party wields assets for the benefit of the other party. Society is a group of individuals, who grow together for the beginning of any literary, scientific or charitable purpose. “Section 8 company/NGO registration is a non-profit enterprise affiliated with a commercial enterprise. Also created for the progress of goals like trust or society.
Board of Management
In section 8 registration of the company it is clear that it shall have the members of the board. They make quick decisions and takeover prevention is easier than societies and trusts. How? An individual’s power prevails in a trust and a society is almost more democratic, and consent is required to pass a resolution.
All over India Registration
The business or companies did not know that you have to appeal for society and trust registration in the same state where you live or reside. Like if you are from Maharashtra then you have to apply for registration in Maharashtra itself. You can’t get it done in Delhi. So, in short, local access is only for registration, so choosing section 8 is a better option as it has reached all over India.
Legislation and Statue
Section 8 Company Register is applicable all over India under the Indian Companies Act, 1956. For Trust registration, the relevant state trust act or Indian Trust Act has been amended. So, it is true that it is very easy to register a section company or an NGO like any private limited company.
Change in Registered office
It is very difficult in case of Bit Trusts and Societies but very easy in Section 8 company as the entitlement reach is all over India. The government is also giving you priority to register your NGO at national level as Section 8 company.
Who can apply for NGO By Section 8 Company Registration?
The eligibility criteria for section 8 company registration are as follows:
- Any Person
- HUF ( Hindu Joint Family)
- Limited Companies
- 2 or more persons acting as shareholders/directors of the company
- An individual to be a resident of India
- NRIs or foreign nationals can also be register.
Requirements for Starting a NGO by Section 8 Company are as follows:
- Minimum 2 shareholders and Minimum 2 directors (director and shareholder can be the same person)
- 1 Director must be resident in India.
- No minimum -paid-up capitals
- Important documents such as Memorandum of Association (MOA) & Article of Association (AOA)
Benefits of Section 8 Company/ Registering NGO
There are several benefits of nominating an NGO or NPO under Section 8 of the Companies Act 2013. Any partnership firm can be a part of its individual capacity and obtain Directorship. Some of them are as follows:
Separate Legal Identity: Section 8 company registration has a separate legal entity of registration and it enjoys a separate legal identity from its members.
No minimum capital: There is no minimum paid-up capital requirement.
Legal Compliance: A registered NGO gets legitimate status and becomes accountable for the money received. For example, when a person donates money to a charitable trust, it is used in the name of the organization and applied to the activities of the trust. If there are unregistered firms, the assets can be taken down in anyone’s name and perhaps used to their advantage.
Privilege to the donators: Under Section 80G, the privilege is given to the donors if the Section 8 company is registered under Section 80G.
Tax Benefits: There are several tax benefits under the Section 8 Company Registration in India. Continuous receipt of tax benefits under Section 12AA and 80G of the Income Tax Act.
Documents Required for Section 8 Company/NGO Registration-
- DSC and DIN of all directors
- Registered office utility bill (electricity, water, phone bill, etc.)
- Memorandum of Association and Articles of Association
- ID Proof for Members including Aadhaar Card, Passport, Voter ID, etc;
- Passport Size Photographs
- Form DIR-2 that consents to act as director.
Section 8 company/NGO registration procedure
After understanding the documents, another step is to choose a name for the company. So, follow the step by step NGO registration process:
Step 1: Apply for DSC and DIN
To register a company first step is to apply for DSC (Digital signature) of all the directors. If you do not have any of them, an application will be made to the Certifying Authority. It is mandatory to fill the online form to get the license. DIN (Director Identification Number) is also mandatory for all the participants. The central government provides the DIN before filling the company registration form. If the directors already have both moves on to the next step.
Step 2: Apply for the name availability
For name approval, an application in Form INC-1 is filed with the Registrar of Companies (ROC). Section 8 Company is required to add words like Foundation, Association, Forum, Council, Chamber, etc. complying with the Company as per Incorporation Rules 2014.
Step 3: File the MOA and AOA
Once the approval of the name from the ROC office proceeds. One must draft both Memorandum of association (MOA) and Articles of Association ( AOA) electronically. These both forms are necessary to simplify the process of company registration in India. The memorandum describes the approval of the company whereas the articles of association contain the confidentiality rules and regulations of the company.
Step 4: Issuance of Certificate of Incorporation and License
Form INC 12 registers with the ROC for the issuance of a License to the Section 8 Company under the Companies Act, 2013. This includes a Certificate of Incorporation along with a Company Identification Number (CIN). Opening of a current bank account with PAN and TAN of the company and in the name of the company.
Applicability of Tax Exemption is a general view that Section 8 company should not pay tax as they work towards the benefit of the public at large. But this is not true. Section 8 company registration, like any other legal entity, is liable to pay tax. To be exempt from tax, a Section 8 company is expected to obtain certification from the Income Tax authorities for related exemptions such as Section 12A and 80G.
How Compliance Calendar can help?
Section 8 Company/NGO registration fee depending on the state and capital. Many applicants have DSC and DIN before. So the registration process includes Section 8 company registration which cost less because the application for DSC & DIN is jumped. There are many online portals to clarify the registration process. But our portal provides many affordable prices for NGO registration fee. Our CA services are easy to afford and are leading with all legal services. Customer Satisfaction is the main objective of our services to make them happy. If you have any questions, feel free to email us at info@ccoffice.in or connect at 9988424211