What is difference between NGO and Section 8 company?
This article will discuss the differences between an NGO and a Section 8 company in India. An NGO (Non–Governmental Organization) is an organization that works independently of any government to provide services to people in need. A Section 8 company is a company that is registered under the Companies Act 2013, and is dedicated to promoting commerce, art, science, religion, charity, or any other useful purpose. This article will compare the differences between these two types of organizations, including their legal structure, activities, and sources of funding.
Section 8 company
Section 8 Companies are a type of Non-Governmental Organizations in India and are registered under the Companies Act 2013. They are not-for-profit organizations that are set up for charitable purposes such as promoting commerce, art, science, religion, charity, and other objects of public interest. The Ministry of Corporate Affairs regulates section 8 companies. They must comply with specific rules and regulations, such as having at least three directors, a Board of Directors, and an annual general body meeting. They must also file an annual return with the Registrar of Companies. Lastly, they are subject to the same regulatory framework as all other companies in India but are exempt from certain sections of the Companies act 2013.
What are NGOs
Non-Governmental Organizations (NGOs) are legally registered entities created by individuals, groups, or organizations not affiliated with any government. Individual donations, corporate sponsorships, grants, or a combination of all three usually fund them. NGOs can be found in almost every sector of society and can have a variety of purposes, including public service, advocacy, research, or humanitarian work. They work in many different ways, such as providing direct services, raising awareness, advocating for policy change, researching and developing new solutions, and engaging with the public and other stakeholders. NGOs are often seen as a force for positive change, providing more direct and flexible support, challenging injustice and promoting human rights, and providing vital services in areas where government or other organizations are unable to.
The key differences between an NGO and a Section 8 Company are:
- An NGO is a voluntary organization, while a Section 8 Company is a legal entity governed by the Companies Act 2013.
- An NGO is typically funded by individual donations, corporate sponsorships, grants, or a combination of all three. A Section 8 Company, in contrast, may receive funding from the government, as well as other sources.
- An NGO is formed to pursue a mission, typically charitable. In contrast, a Section 8 Company is created to promote commerce, art, science, religion, charity, or any other helpful object for the benefit of society.
- An NGO is exempt from certain sections of the Companies Act 2013, such as the requirement to use the word “limited” in its name and the requirement to have a minimum of seven shareholders. A Section 8 Company, however, is subject to the same regulatory framework as all other companies in India.
- An NGO does not have to pay income tax on profits as long as the profits are used for the purpose of its mission. A Section 8 Company, however, is exempt from paying income tax on profits.