Are you curious about Section 8 company GST registration? Let’s see! Section 8 companies are generally formed to advance non-profit goals like business, commerce, the arts, charity, education, religion, etc. A Section 8 Company needs two directors to incorporate.
Nonprofits can register with the Registrar of Societies in India or incorporate under Section 8 of the 2013 Company Act. Instead of paying dividends, this corporation uses its income to pursue its goals. Section 8 and 25 companies were the same under the 1956 Companies Act.
Section 25 of the 2013 Companies Act became Section 8 to reflect this amendment. This article covers GST Registration for Section 8 Companies.
Is GST Registration Required for a Section 8 Company?
Whether the Section 8 corporation sells goods or services determines the answer. The GST Act defines a taxable person as “any person who carries on any business at any place in India and who is registered or required to be registered under this Act.” A person can be an individual, Hindu undivided family, company, firm, limited liability partnership, association, co-operative society, government institution, trust, or artificial legal person.
Section 8 companies are GST-defined persons. Not all Section 8 enterprises must register for GST. GST registration is required only for Section 8 enterprises engaged in trade and commerce. The GST registration requirement applies to Section 8 companies that sell goods or services for a charge.
GST registration barrier for Section 8 companies is ₹20 lakh in most states and ₹10 lakh in particular category states like Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand, and Himachal Pradesh. Regardless of turnover, a Section 8 firm that sells goods or services beyond its state must register under GST. A Section 8 firm that sells on Amazon or Flipkart must register for GST regardless of its turnover.
Also Read: How To Choose The Right Type Of GST Registration
Benefits and Challenges of GST Registration for a Section 8 Company
Section 8 company GST registration has some benefits and challenges. Some of them are:
Benefits
- Section 8: companies can claim GST ITC on goods and services purchased. Operations might be cheaper and more efficient for the Section 8 firm.
- A Section 8 firm with a yearly turnover under ₹50 lakh might benefit from the GST composition plan. Rather than monthly reports, Section 8 companies can file quarterly GST returns and pay 1% for manufacturers and traders and 5% for service providers. The Section 8 corporation can save time and money by simplifying compliance.
- GST registration boosts credibility and transparency for Section 8 companies. The cause may gain more donors and beneficiaries.
- GST registration protects Section 8 companies from penalties and interest. Section 8 companies who fail to register for GST may suffer cancellation, confiscation of goods or services, fines, and interest.
Challenges
- GST registration for section 8 company to file returns, keep records, issue invoices, pay taxes, etc. This might add administrative work and costs to Section 8 companies.
- GST requires Section 8 companies to deal with the central government, state government, and GST council. This can confuse and complicate Section 8 companies.
- Section 8 companies risk GST audits and inspections. This can irritate and inconvenience Section 8 companies.
- A Section 8 firm must pay GST on donor donations. This may cut its funding.
Documents and Procedures Required for GST Registration for a Section 8 Company
The following are the documents and procedures required for Section 8 company GST registration:
Documents
- PAN card of the Section 8 Company
- Certificate of Incorporation of the Section 8 Company
- Memorandum of association and articles of association of the Section 8 Company
- Board resolution authorizing a person to sign the GST application
- PAN card, Aadhaar card, and photograph of the authorized person
- Proof of address of the registered office of the Section 8 company, such as electricity bill, rent agreement, etc.
- Bank account details and canceled cheque of the Section 8 Company
Procedures
- 1. Log in to the GST portal at https://www.gst.gov.in/ and click on “Register Now” under “Taxpayers (Normal/TDS/TCS).”
- 2. Basic details, including PAN, state, district, legal name, email, and mobile number, must be filled out and proceeded with by clicking “Proceed.”
- Check the email and mobile number to receive the OTP, and click “Continue.”
- Your email and mobile number will be sent as a temporary reference (TRN). Keep noting it down for future referrals.
- Login to the GST portal using the TRN and OTP and fill in business details, promoter details, authorized signatory details, principal place of business details, additional place of business details, goods and services details, bank account details, etc.
- Scan the required documents, upload them, and click “Submit”.
- An acknowledgment number (ARN) was sent to your email as well as your mobile number, respectively. Keep it noted for future reference.
- The GST officer will verify your application within three working days. If the application is approved, your email and mobile number will issue a registration certificate (GSTIN). If the rejection is done, a notice must be issued giving the grounds for such rejection. The reply to such a reply may be filed with the proper officer within seven working days from the date of service of the notice in Form GST REG-05.
Also Read: How To do GST Registration Online
Conclusion
If a Section 8 firm sells goods or services, it must register for GST. Section 8 company GST registration offers both benefits and challenges to the Section 8 companies. The GST registration documentation and processes for a Section 8 corporation are straightforward. Section 8 companies must follow GST legislation to avoid penalties and interest.
Read More: Multiple GST Registrations At The Same Address: Conditions And Case Law
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Frequently Asked Questions
Which firms do not need to register for GST?
Businesses that exclusively supply items and have revenue under Rs. 40 lakh are exempt from GST registration. The GST composition scheme is also available to enterprises with yearly turnovers under Rs. 1.5 crore.
Also Read: GST Registration: Who Needs to Register for GST?
Do Section 8 corporations pay no taxes?
Section 8 companies are taxed like others. They pay a 30% tax on profits. If a Section 8 company is registered under Section 12AA of the Income Tax Act, its profits are tax-free, and no taxes are payable.
What are Section 8 company GST registration requirements?
Section 8 companies must register for GST if they sell goods or services for consideration and exceed the threshold restrictions.
Can a Section 8 corporation voluntarily register for GST without meeting the thresholds?
Section 8 companies can voluntarily register for GST even if their turnover exceeds the thresholds. Companies seeking input tax credits may benefit.
