Looking to start a non-profit organization with corporate credibility? Section 8 Company is the best legal structure for NGOs and charitable organizations in India.
What is a Section 8 Company?
A Section 8 Company is a non-profit organization registered under Section 8 of the Companies Act, 2013. It is formed for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment, or any other useful object.
Unlike regular companies, Section 8 Companies cannot distribute profits to their members. All profits must be utilized for promoting the company's objectives.
Key Characteristics of Section 8 Company
- Non-Profit Nature: Cannot distribute profits as dividends
- No Minimum Capital: Can be formed without any minimum capital
- Limited Liability: Members have limited liability
- Separate Legal Entity: Has its own legal existence
- No Suffix Required: Need not use "Limited" or "Private Limited" in name
- License from Central Government: Requires license from MCA
Section 8 Company vs Trust vs Society
| Feature | Section 8 Company | Trust | Society |
|---|---|---|---|
| Governing Law | Companies Act, 2013 | Indian Trust Act, 1882 | Societies Registration Act, 1860 |
| Registration | Central (MCA) | State level | State level |
| Members | Minimum 2 (Pvt) / 3 (Public) | Minimum 2 trustees | Minimum 7 |
| Credibility | Highest | Medium | Medium |
| Compliance | High | Low | Medium |
| Foreign Funding | Easier (FCRA) | Possible | Possible |
Benefits of Section 8 Company
1. Highest Credibility
Section 8 Companies are considered the most credible form of NGO. Corporate structure ensures transparency and accountability.
2. No Minimum Capital Required
Unlike Private Limited Companies, Section 8 Companies can be formed without any minimum capital.
3. Tax Exemptions
Section 8 Companies can avail various tax exemptions:
- Income tax exemption under Section 12A
- 80G certificate for donors (donations tax-deductible)
- CSR funding eligibility
- Exemption from stamp duty in many states
4. Limited Liability
Members' liability is limited to their contribution. Personal assets are protected.
5. Foreign Funding Eligible
With FCRA registration, Section 8 Companies can receive foreign contributions more easily.
Documents Required for Section 8 Company Registration
For Directors
| Document | Purpose |
|---|---|
| PAN Card | Identity and tax identification |
| Aadhaar Card | Address proof |
| Passport-size Photo | For DIN application |
| Address Proof | Bank statement/utility bill |
Additional Documents
- Declaration by directors (INC-8)
- Affidavit from each subscriber (INC-9)
- Estimated annual income and expenditure statement
Section 8 Company Registration Process
Step 1: Obtain DSC
All directors need Class 3 DSC for signing documents.
Step 2: Name Reservation
Reserve company name through RUN service. Name should indicate charitable purpose.
Step 3: Apply for License (INC-12)
Before incorporation, apply for license from Central Government with draft MOA, AOA, and financial projections.
Step 4: File SPICe+ (Incorporation Form)
After license approval, file SPICe+ for incorporation.
Step 5: Certificate of Incorporation
Upon approval, you receive Certificate of Incorporation, License, CIN, PAN, and TAN.
Section 8 Company Registration Fees
| Component | Fee |
|---|---|
| Name Reservation (RUN) | Rs. 1,000 |
| INC-12 (License Application) | Rs. 2,000 |
| SPICe+ Filing | Rs. 500 |
| DSC (per director) | Rs. 1,500-2,000 |
Total with LegalX India: Rs. 14,999 - Rs. 44,999
Timeline for Section 8 Company Registration
| Stage | Duration |
|---|---|
| DSC Issuance | 1-2 days |
| Name Approval | 2-3 days |
| INC-12 (License) Approval | 15-30 days |
| SPICe+ Filing & Incorporation | 7-10 days |
| Total | 30-45 days |
Important Registrations for Section 8 Company
1. 12A Registration
Exempts the company's income from tax. Essential for tax benefits.
2. 80G Registration
Allows donors to claim tax deduction on donations.
3. FCRA Registration
Required to receive foreign contributions. Apply after 3 years of operation.
4. Darpan Registration (NGO Darpan)
Portal for NGOs to register with NITI Aayog. Required for government funding.
Frequently Asked Questions
Can a Section 8 Company make profits?
Yes, but profits cannot be distributed to members. All profits must be used for the company's objectives.
Can directors receive salary?
Yes, directors can receive reasonable remuneration for their services.
Is audit mandatory for Section 8 Company?
Yes, statutory audit is mandatory regardless of turnover.
Why Choose LegalX India?
- 500+ Section 8 Companies Registered: Extensive experience in NGO registration
- Complete Package: Registration + 12A + 80G in one go
- Expert Team: CAs and CSs specialized in non-profit compliance
- FCRA Guidance: Help with foreign funding registration
Register Your Section 8 Company Today
Start your non-profit journey with expert guidance and support.
Register Now - Starting at Rs. 14,999Written by
CS Amit Verma
Company Secretary with 10+ years of experience in company formations and non-profit registrations.