Overview:

In India, a non-profit organisation can be registered as Trust by executing a Trust deed or as a Society under the Registrar of Societies, or as a non-profit company under Section 8 Company of the Companies Act, 2013. A Section 8 Company is the same as Section 25 Company under the old Companies Act, 1956. Under the new Companies Act 2013, Section 25 (as per the old Act) has now become Section 8.

Generally companies are promoted with an object of making profit by carrying commercial transactions. But a company can be registered with charitable motive with the object not to make any profit also.These companies must be formed with an object to promote of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object. The name of a Company registered under Section 8 of the Act, the name shall include the words foundation, Forum, Association, Federation, Chambers, Confederation, council, Electoral trust etc.

Procedure to be followed for starting Sec 8 Company:

As per section 8 of Companies Act 2013, where it is proved to the satisfaction of the Central Government that a person or an association of persons want to register themselves under section 8 as a limited company for the furtherance of above mentioned objects, the Central Government may, by licence issued in prescribed manner allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited” , and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.

Procedure for registration of Non-Profit making Company Procedure for getting License under section 8 for new companies with charitable objects is given in rule 19 of Companies (Incorporation) Rules, 2014:

1. Apply for digital signatures of directors who do not have DIN.
2. Apply for Director Identification Number.
3. Name Approval:

To file form for Name availability in FORM INC-1, you need to decide various items, which are mentioned in Form INC 1. The name once approved by the authority is valid for 60 days. The Subscriber to the Memorandum and Articles of Association shall be the applicant for the availability of name application.

1. After getting name approval form concerned ROC there need to prepare ground of application, memorandum and Article of Association and need to file FORM RD-1 for license.
2. After getting the License, the MOA and AOA are drafted and sent for MCA Approval.
3. After getting approval from RD and getting License there need to file form for
4. Incorporation i.e. INC-7, DIR-12 and INC-22 online after the MOA and AOA are drafted.
5. If the E Forms are found to be in order and gets approved by ROC. i.e., CERTIFICATE OF INCORPORATION, Once all clarifications are provided, the Certificate of Incorporation is issued by the ROC and the company is deemed to be incorporated from the date of the Certificate of Incorporation.
6. PAN and TAN Number are applied after getting the Incorporation Certificate.
7. Sec 12A Registration for Section 8 Companies:

Sec 12A (under Income tax act, 1961) registration is a one-time registration obtained by most Trusts, right after incorporation to be exempted from paying income tax. Section 8 Company, Trusts and NGOs having 12A registration enjoy exemption from paying income tax on the surplus income of the Trust or NGO. Income tax exemption is available for all non-profit NGOs. Hence, it is important for all Trusts, NGOs and other Not-for-Profit organizations to be aware of Section 12A of Income Tax Act and obtain the same, soon after incorporation of the Trust or NGO.