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For the development of art, science or any other useful object, a company can be organized after obtaining a section 8 license from the central government. The license is permission to delete private Limited from the proposed name.
Section 8 Company
Our government is under a lot of pressure to ameliorate the conditions within the national legislation. However, due to many factors, the central government cannot address each and every issue simultaneously and this creates a space for specific organizations that assist the government working for the well-being of society. Such organizations are known as non-profit organizations or non- government organizations. Widely known as Section-8 companies, these organizations are registered under the Section-8 of Companies Act 2013. These companies intend to promote art, commerce, sports, safety, science, research, healthcare, social welfare, religion, protection of the environment, etc. The main object of these companies ensures the promotion of the above-mentioned fields, provided the profit is used for promoting only objects of the company (Sec 8(1)(b)).
Advantages
While some critics frown on the use of government funding for public housing assistance, the Section 8 program has its advantages :
Reduced Poverty Rate : With the high cost of finding an apartment for rent, many low-income families end up spending the majority of their income on rent. With assistance from the Section 8 program, a smaller income can stretch further and families can do more with their budget. In turn, this helps families climb out of the poverty cycle, reducing the U.S. poverty rates as a whole.
Reduced Crime Rate : Some traditional public housing facilities, especially in urban areas, become breeding grounds for crime. Placing tenants in privately owned rentals keeps families out of danger and reduces overall crime rates.
Increased Opportunities : Families who participate in Section 8 housing programs are frequently able to move out of impoverished areas and into neighborhoods with better school systems and increased job opportunities.
Eligibility
To incorporate a Section 8 company a minimum of two persons are required over the age of 18 years with at least one person being an Indian citizen and resident.
The Role of GST Suvidha Centers
While GST Suvidha Centers are primarily established to assist businesses in complying with the Goods and Services Tax (GST) regime, they can also play a valuable role in supporting Section 8 companies. While Section 8 companies are generally exempt from GST, they may still need to register for GST in certain circumstances.
When Section 8 Companies Need GST Registration
- Supply of Goods or Services: If a Section 8 company engages in the supply of goods or services for consideration, even if the proceeds are used for charitable purposes, they may need to register for GST.
- Receipt of Grants or Donations: If a Section 8 company receives grants or donations that are subject to GST, they may need to register for GST to claim input tax credit (ITC) on any GST-paid inputs.
- Activities Related to GST-Paying Entities: If a Section 8 company is involved in activities related to GST-paying entities, such as providing services to them, they may need to register for GST.
Services Offered by GST Suvidha Centers to Section 8 Companies
- GST Registration Guidance: GST Suvidha Centers can provide guidance on whether a Section 8 company needs to register for GST based on its activities and sources of income.
- GST Return Filing: If a Section 8 company is required to register for GST, the Suvidha Centers can assist in filing their periodic GST returns accurately and on time.
- GST Compliance Advice: These centers can provide advice on GST compliance matters, such as ITC utilization, invoice verification, and reconciliation.
GST Audits: GST Suvidha Centers can represent Section 8 companies during GST audits and provide necessary support.
Benefits of Using a GST Suvidha Center for Section 8 Companies
- Expertise: GST Suvidha Centers are staffed with professionals who have in-depth knowledge of GST laws and regulations. They can provide expert guidance and assistance on GST-related matters.
- Efficiency: These centers often streamline the GST registration and return filing process, saving time and effort for Section 8 companies.
- Convenience: By offering a one-stop shop for GST-related services, GST Suvidha Centers eliminate the need for Section 8 companies to visit multiple government offices.
Cost-effective: While some GST Suvidha Centers may charge a nominal fee for their services, the overall cost can be significantly lower than hiring a professional accountant or tax consultant.
Additional Considerations for Section 8 Companies
- Exemption Certificates: Section 8 companies should obtain exemption certificates from the relevant authorities to confirm their non-profit status and avoid paying income tax.
- Annual Returns: These companies are required to file annual returns with the Registrar of Companies.
Audit Requirements: Depending on their income and activities, Section 8 companies may be subject to audit requirements.
Conclusion
While GST Suvidha Centers are primarily focused on GST compliance for businesses, they can also provide valuable support to Section 8 companies. By understanding the circumstances under which Section 8 companies may need to register for GST and utilizing the services offered by GST Suvidha Centers, these non-profit organizations can ensure compliance with GST regulations and focus on their charitable objectives.
FAQ'S
Section 8 companies
Who is eligible to apply for the registration of a Section 8 company?
An application for a section 8 company registration can be made by any person or an association of persons, provided:
- The object of the company is to further the ideals of arts, science, research, culture, education, and social welfare in general
- After the incorporation, the company uses its profits in promoting its objectives
- The company refrains from paying dividends or shares to its members.
Who comes under the definition or persons or association of persons mentioned in Section 8?
The Companies Act, 2013 does not define the term ‘persons’. Hence the definition can be inferred from Section 2 (41) of the General Clauses Act, 1897 which mentions that the term ‘persons’ may include individuals or associations of individuals and Companies.
What is the procedure to register a Section 8 company?
An application has to be made using Form INC-12 to the Registrar of Companies (RoC). The following documents are to be attached alongside the application:
- The Memorandum of Association (MoA) and Articles of Association (AoA) filed through Form INC-13 and Form INC-31 respectively with the Form SPICe-32
- A declaration duly notarised by an appropriate authority through Form INC-14
- The sources of income and the possible expenditure of the company
- A declaration through Form INC-15 duly notarised by the person making the application
- Form INC-9 to be furnished by the directors, on appropriate stamp paper and having it duly notarised
- A copy of the resolution of the board/members.
Who authorizes the license of a Section 8 company?
The Central government authorizes the Registrars of Companies of the respective jurisdictions to issue the license for a Section 8 company.
Does Section 8 allow a company with unlimited liabilities to be registered?
As per the Companies (Incorporation) Rules, 2014, only a company with limited liabilities can be registered under the Act.
Is it mandatory that only a company limited by shares can be incorporated under Section 8?
No. Section 8 accommodates both companies limited by shares or by guarantee, i.e with or without share capital.
Is it possible to register a Person Company (OPC) or convert one to a Section 8 Company?
No. The Companies Incorporation (Rules), 2014 forbids OPC to be incorporated or converted to a Section 8 company.
Is it possible to register a foreign company as a Section 8 company in India?
As per the Companies Act, 2013, a foreign company is a body corporate that is established outside India and operates its business in India, either directly or through an agent, physically or via electronic mode, and conducts its course of business in India.
On the other hand, a corporate company incorporated outside India to carry not-for-profit activities, cannot fall under the ambit of a foreign company, as there is no business activity that is being carried out. Therefore, the respective company cannot be termed as a foreign company.
However, within the norms of FEMA (Foreign Exchange Management Act, 1999) regulations, the company can institute branch offices.
Whether Trusts or Co-operative Societies can become a member or subscriber of a Section 8 company?
Yes. The Companies Act, 2013 does not prohibit a Trust or Co-operative Society from becoming a member of a Section 8 company.
Can contributions or financial aid be extended from overseas or non-residents to Section 8 companies?
The contributions made to Section 8 companies from overseas or non-resident Indians must bear compliance with the norms laid out under the Foreign Contribution and Regulation Act, 2010.
The contributions can therefore be received in accordance with the Companies Act, 2013 in addition to the Foreign Contribution and Regulation Act, 2010.
