In this article
What is a Section 8 Company?
A Section 8 Company is a not-for-profit entity registered under Section 8 of the Companies Act, 2013 (earlier Section 25 of the 1956 Act). Key characteristics:
- Formed for promoting charity, education, science, sports, religion, social welfare, environment protection, etc.
- Profits and income must be applied for promoting its objectives
- Cannot distribute dividend to members
- Has limited liability and separate legal entity status (unlike trusts/societies)
- 'Limited' / 'Private Limited' suffix NOT required in name
Section 8 Company vs Trust vs Society
| Feature | Section 8 Co | Trust | Society |
|---|---|---|---|
| Governing law | Companies Act 2013 | Indian Trusts Act 1882 | Societies Reg Act 1860 |
| Legal entity | Yes | No (trust property) | Limited |
| Pan-India ops | Yes | Yes | State-restricted |
| FCRA eligibility | Eligible | Eligible | Eligible |
| Compliance | Heavy (annual) | Light | Moderate |
| Credibility | Highest | Lower | Moderate |
| Setup cost | ₹15-30k | ₹3-8k | ₹5-10k |
When to choose Section 8: Need credibility for FCRA/CSR funding, want pan-India ops, planning to scale.
Registration process
- Get DSC for at least one director (1 day)
- Apply for DIN via SPICe+ for proposed directors
- Name reservation via SPICe+ Part A — preferably ending with words like 'Foundation', 'Association', 'Forum', 'Federation' (not mandatory but customary)
- Draft MOA and AOA — must include the specific charitable objects
- License application under Section 8 via Form INC-12 — Regional Director's office reviews charitable nature
- License granted (INC-16) — License No. issued. Takes 30-45 days
- File SPICe+ Part B with the license — for actual incorporation
- Certificate of Incorporation issued — Section 8 Co is born
Total timeline: 60-90 days (longer than regular Pvt Ltd due to license requirement).
Documents required
- PAN of all proposed directors and members
- Identity and address proofs of directors
- Photograph of directors
- Registered office address proof + NOC
- Utility bill (not older than 2 months)
- Drafted MOA and AOA with charitable objects
- Statement of grounds for incorporation (Form INC-12 attachment)
- 3-year financial projection
- List of promoters with their contribution
- INC-9 — Director declaration
- INC-15 — Declaration by promoter
Compliance and tax benefits
Tax benefits:
- Section 12A registration — Income of the company exempt from tax (subject to conditions)
- Section 80G registration — Donors can claim 50% (general) or 100% (specified causes) tax deduction
- FCRA eligibility — Can receive foreign donations after FCRA registration (after 3 years of operation)
Compliance burden:
- Same as Pvt Ltd — AOC-4, MGT-7, DPT-3, ADT-1, DIR-3 KYC
- Additional: 12A/80G annual filings, FCRA returns if applicable
- Statutory audit mandatory
- Cannot pay director's salary above what is reasonable for services rendered
Frequently Asked Questions
Can directors of Section 8 receive salary?
Yes, reasonable salary for services rendered (e.g., as executive directors). However, cannot receive dividend or distribute profits. Salary must be approved by board and disclosed in returns. Excessive salary is scrutinised by IT department.
Do I need Section 12A or 80G after registration?
Section 8 registration alone gives you the legal entity. To claim tax exemption (own income exempt) you need Section 12A. To enable donors' tax deduction, you need Section 80G. Both are separate applications to Income Tax Department, taking 3-6 months each.
Can a Section 8 company do commercial activities?
Limited commercial activities allowed if they are INCIDENTAL to main charitable objects (e.g., selling publications related to mission). Substantial commercial activity disqualifies you under Section 11 (charitable objectives) and triggers tax liability.
Differences between Section 25 (old) and Section 8 (new) companies?
Section 25 was under the Companies Act, 1956. Section 8 is the corresponding provision in the 2013 Act. Existing Section 25 companies were automatically migrated to Section 8. The substantive requirements are similar but the new Act has more compliance obligations.
Continue reading
Company Registration
How to Register a Private Limited Company in India: Step-by-Step Guide (2026)
10 min · 15 Jun 2026
Business Structure
Pvt Ltd vs LLP vs OPC: Which Business Structure Should You Choose? (2026)
8 min · 12 Jun 2026
GST
GST Registration in India: Complete Guide (Eligibility, Process, Documents, Timeline 2026)
9 min · 10 Jun 2026
ROC Compliance
DIR-3 KYC: Annual Director KYC Guide (Due Date, Process, Penalties)
6 min · 08 Jun 2026