What is Section 8 Company? Registration, Fees, Benefits Explained

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A Section 8 Company is a non-profit organization registered under the Companies Act, 2013, formed to promote charitable objectives like education, social welfare, and environmental protection, where profits are reinvested and not distributed.

With the intent to promote non-profit objectives of organisations or individuals, the government has made a Section 8 Company.

For a businessman on a mission to open schools in rural areas or a company aiming to provide skill-development programs in underprivileged areas, while having a complete legal structure, credibility, and tax efficiency, Section 8 Company provides them the scale to impact.

Incorporated as a non-profit company under Section 8 of the Companies Act, 2013, these organisations are formed to promote charitable activities like education, social welfare, and environmental protection.

What is a Section 8 Company?

Under Section 8 of the Companies Act, 2013, the Central Government (via the Ministry of Corporate Affairs) grants a licence to entities that intend to promote non-profit objectives. But it’s only when these organisations reinvest the profits into their existing charitable operations.

In essence, non-profit does not mean that you cannot generate revenue. There are multiple ways to generate income, like through donations, charities, grants, and other business activities.

However, the core principle is that all profits and income generated must be used within the Section 8 Company only.

The eligible objectives outlined in Section 8 of the Companies Act, 2013 include;

Education
Charity
Social Welfare
Promotion of Arts, Science, Sports, and Culture
Environment Protection
Religion and Community Development

You can incorporate an existing company under Section 8 or form a new organisation individually or with a group of individuals.

Simply put, Section 8 gives you a formalised and government-recognised way to run a mission-driven organisation which may look like a company from the outside, but at its core, is an NGO.

Businesses running on this model get credibility, limited liability, and access to funds from different channels, including Corporate Social Responsibility (CSR).

Section 8 Company vs Trust vs Society vs Pvt Ltd – How Do They Differ?

Criteria	Section 8 Company	Trust	Society	Private Limited (CSR Arm)
Legal framework	Companies Act, 2013	Indian Trusts Act, 1882	Societies Registration Act, 1860	Companies Act, 2013
Profit distribution	Not allowed	Not allowed	Not allowed	Allowed
Minimum capital	No minimum	No minimum	No minimum	No minimum (practically required)
Stamp duty	₹0 on incorporation	Applicable (varies by state)	Applicable	Applicable
Audit requirement	Mandatory	Mandatory (if income threshold crossed)	Mandatory	Mandatory
Change of objectives	Requires Central Govt approval	Easier	Moderate difficulty	Easy
Tax exemption (12A/80G)	Available	Available	Available	Not available
CSR fund eligibility	High	Moderate	Moderate	Not eligible as a recipient
Foreign donation (FCRA)	Allowed with registration	Allowed with registration	Allowed with registration	Not applicable
Credibility with donors	Very high	Moderate	Moderate	Low (for non-profit work)

Go with Section 8 if you need maximum donor and CSR credibility for your organisation from day one. Moreover, if you plan to scale the organisation nationally and work with other organisations and want a structured governance plus compliance system for your non-profit, go with Section 8 Company registration.

Also read: What is Private Limited Company (Pvt Ltd)?

What are the Advantages of a Section 8 Company?

While offering you a legal structure, a Section 8 Company impacts how you raise funds, operate the non-profit, and how easily you can scale.

Limited Liability Protection: Section 8 gives you limited liability protection, which means if the company faces financial or legal claims, your personal finances, house, and assets cannot be attached to the company. This is crucial if you are getting a large volume of donations and handling multiple operations.
Separate Legal Entity: The non-profit operates as a separate legal entity, which means any assets, properties, etc., you buy will be registered under the company name. Moreover, the company’s name will come in contracts, to raise funds, and more.

No Minimum Capital Requirement: A Section 8 company means you won’t have to show any capital to start the organisation. After paying the minimal Section 8 company registration fees, you can start the operations.

Zero Stamp Duty: During incorporation, where companies registered under other formats have to pay a stamp duty, Section 8 companies need not pay any. This reduces the upfront cost to kickstart the organisation.

12A Registration: After the initial registration, when you register with Section 12A, any income you generate is tax-free. Moreover, with 80G registration, even your donors can claim tax deductions, which improves your ability to raise funds from all corners of the country, and since donors can claim tax exemptions, they will be more than ready to donate.

Get CSR Funding: Companies registered under Section 8 are eligible to get CSR-based funding and assistance for corporate houses and large organisations. The legal structure and credibility this section grants make these organisations an attractive destination for for-profit companies.

FCRA Registration: Although the process to get FCRA registration does not get easier, if you can get it done, you can legally obtain funds as donations and charities from foreign donors.

Perpetual Succession: Non-profit companies with Section 8 Company registration operate regardless of founder changes. Hence, the certification ensures the mission continues regardless of who is sitting in the management.

Access to Government Grants: Once registered, you can register with the government’s Darpan portal. This registration opens doors for government-led initiatives, including grants and partnerships.

Also read: LLP or Private Limited? Tax, Cost & Funding Comparison Explained

What are the Disadvantages of a Section 8 Company?

Cannot Distribute Profits: Since you are working as a non-profit organisation, any profits generated cannot be distributed among the founders. All profits need to be reinvested into the same organisation.

Higher Compliance Burden: From ROC filings to board meetings to audits, annual returns, tax registrations, and more, ensuring compliance for a Section 8 Company is a complex process.

Tightly Regulated Dissolution: Dissolution of a Section 8 company isn’t as easy as you cannot shut down all operations and that’s it. Instead, you have to transfer all assets to another Section 8 entity and obtain approvals.

Cannot Change Objectives: For an existing Section 8 company, changing the objectives requires a major shift with approvals from the Central Government, limiting an organisation’s flexibility.

No FDI: To accept Foreign Direct Investment, the company needs FCRA registration, which has its own approvals, timelines, and scrutiny.

Who Can Register a Section 8 Company?

To build a Section 8 company means you need to qualify for some basic requirements as an individual and for setting up the company structure.

Requirements to Form a Section 8 Company

Indian national, group of individuals or a Hindu Undivided Family (HUF)
Existing company wanting to change its structure to a non-[rpfit.
NRI or foreign national, but you must meet the director and compliance requirements.

To Set up the Company, you will need

Minimum of 2 directors for a Private Section 8 Company
3 directors for a public Section 8 Company
One resident Indian director

Moreover, you also need to have at least 2 members, who can be shareholders or subscribers. Plus, a clearly defined charter or non-profit objective is essential as mandated under Section 8 of the Companies Act 2013.

Section 8 Company Registration Process (Step-by-Step)

Obtain DSC: Generally, taking 1 or 2 days, a Digital Signature Certificate is required to sign MCA filings electronically.
Apply for DIN: Get it through SPICe+ within one day, your Director Identification Number is also necessary for documentation and recognition purposes.
Reserve Name: Submit a couple of options for the Name of your non-profit that reflects your objectives, and the MCA will approve one name based on availability and compliance.
Draft MOA and AOA: Memorandum of Association, to be made as per the INC-13 format for a Section 8 company and Articles of Association are required to share the company’s objectives.
File INC-12 for Section 8 License: Apply for a licence with the Regional Director through Form INC-12, along with other declarations like INC-14 and INC-15, plus the financial projections.
Receive Licence: With the submissions complete, the MCA issues a Section 8 license through Form INC-16 or INC-17. This means you can now proceed with the incorporation of the company.
File SPICe+ and Part B: With the formalities complete, you need to submit the incorporation details, including directors, capital structure, and registered office.
Receive Certificate: Your Company 8 incorporation is complete as the Registrar of Companies issues the Certificate of Incorporation (COI), giving your company a legal structure.

Also read: Articles of Incorporation: Meaning, Requirements & Filing Process in India

Documents Required for Section 8 Company Incorporation

DSC for all directors
DIN (via SPICe+)
MOA (INC-13) and AOA drafts
INC-14 (CA/CS declaration)
INC-15 (subscriber declaration)
INC-9 (director declaration)
Registered office proof (rent agreement/utility bill)
Director ID and address proofs
Projected income & expenditure statement (3 years)

Section 8 Company Registration Fees

Fee Type	Amount (₹)	Notes
DSC (per director)	1,000–1,500	One-time cost
DIN application	NIL	Included in SPICe+
Name reservation	1,000	SPICe+ Part A
Section 8 licence (INC-12)	Varies	ROC-based fee
SPICe+ filing fee	Varies	Based on capital
Stamp duty (MOA/AOA)	NIL	Full exemption
Professional fees (CA/CS)	8,000–15,000	Market-dependent
12A registration	NIL	Govt fee exempt
80G registration	NIL	Govt fee exempt

An estimated cost of ₹10,000 to ₹25,000 is required for Section 8 company registration, including the professional support and structure you need.

What to Do After Registering Your Section 8 Company?

Once registered or incorporated, you must not stop here, but there are several other things required post-registration, including:

12A Registration: Registering here makes your income fully tax-exempt, and you need to apply for the same soon after incorporating using Form 10A.
80G Registration: Filed with the Income Tax Department, this registration will allow donors to claim tax deductions and doing so will directly improve your fundraising conversion.

CSR-1 Filing: Registered with the MCA and a mandatory process since April 2021, this filing is required to legally receive CSR funds from other companies under Section 135.
NGO Darpan: Running under the NITI Aayog, the Darpan certificate registers your company with the Ministry of Home Affairs, and this opens the gates to grants and ministry schemes.
FCRA Registration: Needed to receive foreign donations, you can only apply for the FCRA registration after 3 years of operations.

Annual Compliance Requirements Needed After Registration

When running a Section 8 Company, you also need to fulfil some compliance requirements that need to be completed annually.

Minimum 2 board meetings every year
Annual return (MGT-7): File within 60 days of AGM
Financial statements (AOC-4): File within 30 days of AGM
Statutory Audit: Mandatory regardless of turnover
Income Tax Return filing
Maintain statutory registers and records
GST compliance if turnover exceeds ₹20L (services) / ₹40L (goods)

Non-compliance puts you under the scanner of multiple government agencies and organisations. Once flagged, your company will be at risk of financial penalties, ROC Strike Off, cancellation of 12A/80G status, and loss of credibility among donors.

Conclusion

A Section 8 Company is the most credible and tax-efficient structure to build a scalable yet non-profit organisation. The registration process for a Section 8 company has multiple steps, but it’s nothing you cannot figure out on your own.

The thing that does need your attention is building the financial infrastructure from day one. How you collect donations, track fundings, manage payouts, and manage records directly impacts your ability to scale and stay compliant.

After registration, you need to set up a reliable payment system, and this is where Cashfree comes in. We already support more than 1 million Indian businesses, including NGOs. Cashfree gives you smart AI-enabled payments management and 100+ payment modes with instant settlement options.

FAQs

What is a Section 8 company in simple terms?

A Section 8 company is a non-profit organization that uses its income for social or charitable purposes.

What is the cost of Section 8 company registration?

It typically costs between ₹10,000 and ₹25,000.

Can a Section 8 company make profit?

Yes, but profits must be reinvested.

What is the difference between a Section 8 company and a Section 25 company?

A Section 25 company is the old term used to denote a Section 8 company, but the former is referred to in the Companies Act 1956, and the latter terminology is updated in the Companies Act 2013.

How long does it take for Section 8 Company registration?

Given you complete all the formalities as required without any delays or re-submissions, it can take between 15 and 30 days for the entire process. But delays can occur due to any mismatch in information.

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