Section 8 companies, commonly known as non-profit organizations (NPOs) or non-governmental organizations (NGOs), play a crucial role in social welfare and community development. These entities are established with the primary objective of promoting charitable activities, advancement of education, science, research, sports, art, culture, and other such endeavors for the public good.
One significant benefit that Section 8 companies enjoy is tax exemption status. Here’s a detailed overview of the tax exemptions applicable to Section 8 companies in India:
Section 11 of the Income Tax Act, 1961: Section 8 companies are eligible for income tax exemption under Section 11 if their income is applied towards charitable or philanthropic purposes. Any surplus generated by the organization must be plowed back into its objectives and cannot be distributed to its members.
Donations Exemption under Section 12A: Donations made to a Section 8 company are eligible for tax deduction under Section 80G of the Income Tax Act. Moreover, the Section 8 company itself is exempt from tax on its income if it has obtained a Section 12A registration. This provision encourages individuals and corporations to contribute funds to support the organization’s activities.
In a world often beset by challenges, there are organizations that shine as beacons of hope, working tirelessly to make a positive difference in the lives of those less fortunate.