Section 8 Company is a Company that is licensed under Section 8 of the Companies Act, 2013 (the Act), which had the main objective for promoting research, social welfare, religion, charity, commerce, art, science, sports, education, and the protection of the environment or any such other object, provided that the profits, if any, or the other income is applied for promoting only the objects of the company and Also, No dividend is paid to its members. Therefore, Section 8 Company is a company which is registered for charitable or not-for-profit purposes.

Charitable Trusts can be set up in three different forms, namely

(a) Register a trust under Indian Trust Act (register the trust at Sub-Registrar’s Office)

(b) Register it as a society under State Co-operative Societies Act or

(c) Incorporate a company under Companies Act, 2013

The registration of a company under Companies Act, 2013 is popularly known as ‘Section 8’ company.

Who can set up a Section 8 company?

The companies with the objective of promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other objective;

Intends to apply its profits, if any, or other income in promoting its objectives; and

Intends to prohibit the payment of any dividend to its members; can be registered as Section 8 Company.

What registrations are required under Income Tax Act?

Charitable Trusts including Section 8 companies are eligible for tax exemption u/s 11, 12, 12A, 12AA, 13 and 80G of the Income Tax Act. The expression “charitable purpose” has been defined under Section 2(15) of the Act to include:(a) relief of the poor,(b) education,(c) medical relief, and (d) advancement of any other object of general public utility.

Can Section 8 company merge with another company?

Yes. Section 8 companies can amalgamate only with other section 8 company and having similar objectives.

We at M.B. YARAGA & CO have incorporated Section 8 companies and obtained Income Tax exemptions for them.

In case you need any assistance to set up a Section 8 company, please email ca.malluby@gmail.com or call us @ +91 9916495890