The phrase Non-Profit in NPO does not mean that the Company cannot generate profit or income. It just implies that the Company can earn income but the promoters cannot be benefitted out of those profits. , All incomes and profits need to be applied for promoting the object. The income cannot be distributed among the promoters.

Still, certain advantages have been provided for an NGO/NPO u/s 8 of Companies Act 2013. Numerous Tax exemptions have also been provided. Even the donors donating to a Section 8 Company are eligible to claim the Tax Exemption against these donations.

Some advantages are:

Separate Legal Identity

Section 8 Company is a distinct legal entity and is separate from it’s members. It has it’s own legal standing apart from its members. And has perpetual existence. As well as organized operations and greater flexibility

No Minimum Capital Requirement

There is no requirement of having a minimum capital to be registered as a Section 8 Company in India. And the capital structure may be changed at any stage as per the growth requirements of the Company. It can be formed without share capital also. Later, the necessary funds for carrying the business can be brought in the form of donations and/or subscriptions from members and the general public.

No Stamp Duty

Section 8 Company is exempt from the payment of stamp duty on the MoA and AoA as is in the case of either a private or a public limited company. Hence, no stamp duty is imposed on the incorporation of Section 8 Company, which is applicable for registration of other forms of company structures.

CARO

Provisions under Companies Auditor’s Report Order or CARO do not apply to this type of Company.

Tax Benefits

There are numerous tax benefits for Section 8 Companies in India.

Name

Section 8 Company is not required to suffix “Limited or Private Limited “, next to it’s legal name. It can be registered with names that have words like Association, Society, Council, Institute, Academy, Foundation, Club, Charities, Organisation, and Federation.

Trustworthy

Section 8 Company has more credibility than all other forms of a charitable organization. Because it comes under the stringent regulations of the Companies Act and requires a mandatory audit annually. Government rules on managing the profits and losses of the company make the company trustworthy. Such as the MOA and AOA cannot be altered at any stage or situation.

Trustworthy

Section 8 Company has more credibility than all other forms of a charitable organization. Because it comes under the stringent regulations of the Companies Act and requires a mandatory audit annually. Government rules on managing the profits and losses of the company make the company trustworthy. Such as the MOA and AOA cannot be altered at any stage or situation.

• Minimum of 2 Shareholders
• Minimum of 2 Directors ( Both Shareholders and DIrectors can be the same people )
• At least one Director should be an Indian Resident
• No requirement of the Minimum Capital
• PAN issued by the Income Tax Department is a mandatory requirement for Indian Nationals
• Passport is a mandatory requirement for identity proof in case of Foreign Nationals
• Any one additional Identity Proof – Voter ID/ Aadhar Card/ Driving License/ Passport is required.
• Anyone Residential Proof i.e. any of the utility bill – Electricity Bill/Bank Statement/Telephone Bill/Mobile Bill
• Proof of the Registered Office Address:
  In the case of a rented property, a rent Agreement along with the latest rent receipt, a copy of the latest utility bill in the name of the landlord, and a no-objection certificate from the premises’ owner is a compulsory requirement.
  In case the premises are owned by the Director or the Promoter then any documents that prove the owners’ establishment such as a Sale Deed/House Tax Receipt and a No Objection Certificate.

The Name of Section 8 Company should comply with the following:

• Short and Simple Name
• A Meaning and Unique Name
• It shouldn’t violate any law
• It shouldn’t use the term “British India”