Unlike a Trust or Society, a Section 8 Company brings together the governance strength of a corporate entity with the mission of a non-profit. In this comprehensive guide, we cover everything you need to know — from definition and eligibility to registration steps, documents, fees, tax benefits, compliance, and frequently asked questions.
A Section 8 Company is a type of company incorporated under Section 8 of the Companies Act, 2013 for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, or environmental protection. The defining characteristic is that no profit is distributed to its members — all income and surplus must be reinvested toward the company's stated charitable objectives.
Section 8 Companies were previously known as Section 25 Companies under the Companies Act, 1956. With the enactment of the Companies Act, 2013, they were re-designated under Section 8.
The concept of a company with charitable objects was first introduced in the Companies Act, 1913, which allowed such companies to be incorporated without the suffix 'Limited' or 'Private Limited'. Based on the Bhabha Committee's recommendations, Section 25 was introduced in the Companies Act, 1956, modeled on the English Companies Act, 1948. The Companies Act, 2013 retained and strengthened this framework under Section 8.
There are three primary legal structures for non-profit entities in India:
• Trust — Governed by the Indian Trusts Act, 1882. Registered with Sub-Registrar/Court.
• Society — Governed by the Societies Registration Act, 1860. Registered with State Registrar.
• Section 8 Company — Governed by the Companies Act, 2013. Registered with the Ministry of Corporate Affairs (MCA).
Of these three, Section 8 Companies are considered the most credible, structured, and governance-intensive — making them the preferred choice for receiving corporate CSR funds, government grants, and foreign donations.
Under Section 8(1)(a) of the Companies Act, 2013, a company may be registered as Section 8 if its objects include the promotion of any of the following:
✅ Education
✅ Sports Promotion
✅ Scientific Research
✅ Social Welfare
✅ Religion
✅ Charity
✅ Commerce Promotion
✅ Arts & Culture
✅ Environmental Protection
✅ Microfinance Activities
✅ Public Utility
✅ Technology & Innovation
Three mandatory conditions must be satisfied: (a) The objectives must fall within the above categories; (b) The company must intend to apply its profits and income only toward these objectives; and (c) The company must prohibit payment of any dividend to its members.
The following conditions must be met to incorporate a Section 8 Company:
• Minimum Members: At least 2 Directors and 2 Members for a Private Section 8 Company; minimum 3 Directors for a Public Section 8 Company.
• No Minimum Share Capital: There is no minimum capital requirement — the company can be started with any amount.
• Resident Director: At least one Director must be an Indian resident (must have stayed in India for at least 182 days in the preceding calendar year).
• Charitable Objective: The primary purpose must be non-commercial and charitable in nature.
• No Dividend Distribution: Profits cannot be distributed to members or directors, directly or indirectly.
• 3-Year Financial Projection: An estimate of future income and expenditure for the next three years must be submitted.
• No Profit Motive: The surplus generated must be used exclusively toward the company's stated objectives.
Eligible Entity
Notes
Individual (Indian or Foreign National)
Natural persons can apply
HUF (Hindu Undivided Family)
Eligible as a member
Existing Limited Company
Can promote/incorporate a Section 8 Company
Partnership Firm or LLP
Can be a member under the Act
Registered Trust
No restriction under Companies Act, 2013
Registered Society
Societies Registration Act society can convert
Co-operative Society
Qualifies as a 'person' under General Clauses Act
Foreign Not-for-Profit Entity
Can promote a Section 8 Company in India (FEMA compliance required)
Important: A One Person Company (OPC) cannot be incorporated as or directly convert into a Section 8 Company. An OPC must first convert to a Private/Public Company, after which conversion to Section 8 is possible.
The entire registration process is 100% online through the MCA (Ministry of Corporate Affairs) portal. Approval typically takes 25–30 working days when all documents are in order.
All proposed Directors must obtain a Class III DSC from a certified agency such as eMudhra, VSign, or Sify. This is required to digitally sign all MCA documents.
Every Director must have a unique DIN. This can be obtained by filing Form DIR-3 with PAN Card, identity proof, address proof, and photograph — or simultaneously through the SPICe+ incorporation form if DIN is not already allotted.
Apply for name reservation on the MCA portal. The name of a Section 8 Company must include words such as Foundation, Forum, Association, Federation, Chamber, Confederation, Council, or Electoral Trust. The name must not be identical or similar to an existing company or trademark.
After name approval, file Form INC-12 with the Registrar of Companies (ROC) along with the following documents:
• Draft Memorandum of Association (MOA) in Form INC-13
• Declaration by a practicing Advocate, CA, CMA, or CS in Form INC-14
• 3-year estimated income and expenditure statement
• Declaration by each applicant in Form INC-15
Within one week of filing the application, publish a notice in Form INC-26 — at least once in a vernacular newspaper in the local language of the district, and at least once in an English newspaper. A copy must be sent to the ROC promptly.
Memorandum of Association (MOA): Filed in Form INC-13. Must clearly state the charitable objectives, confirm that profits will be applied only toward these objectives, and that no dividend will be paid to members.
Articles of Association (AOA): Outlines internal governance — board composition, meeting procedures, decision-making process, and member rights. Can include an entrenchment clause under Section 5(3).
Once the license is granted, file the SPICe+ form (Part A and Part B) along with eSpice MOA, eSpice AOA, Form DIR-2, Form INC-9, eAGILE form, and all KYC documents of directors. Pay the requisite government fees online.
The ROC reviews the application and, upon satisfaction, issues the Certificate of Incorporation electronically. This registration is permanently valid unless revoked or surrendered.
Pro Tip — Timeline Expectations:
• DSC & DIN: 1–3 days
• Name Reservation: 1–3 days
• Section 8 License (INC-12): 7–15 days
• Incorporation (SPICe+): 3–7 days
• Total Estimated Time: 25–30 working days
Document
Requirement
PAN Card
Mandatory for all Indian nationals
Aadhaar Card
Primary identity proof (Indian nationals)
Passport / Voter ID / Driving License
Any one as identity proof
Bank Statement / Electricity Bill / Water Bill
Address proof — must not be older than 2 months
Passport Size Photographs
Recent passport-sized photographs
Email ID & Mobile Number
For MCA portal communication
Passport (Foreign Nationals)
Mandatory along with address proof notarized by Indian Embassy
Details
Utility Bill (Electricity / Water / Telephone)
Not older than 2 months; in the name of property owner
Notarized Rent Agreement
If the office premises are rented
Property Registry / House Tax Receipt
If the premises are owned
No Objection Certificate (NOC) from Owner
Signed by the property owner permitting use as registered office
Form / Document
Purpose
Form INC-12
Application for Section 8 License
Form INC-13 (Draft MOA)
Memorandum of Association for Section 8 Company
Form INC-14
Professional Declaration by CA / CS / CMA
Form INC-15
Declaration by each applicant (notarized on stamp paper)
Form INC-9
Declaration by subscribers and first directors
3-Year Income & Expenditure Estimate
Specifying sources of income and objects of expenditure
Form INC-26 (Advertisement)
Newspaper notice of application
• Limited Liability: Members' personal assets are fully protected. Members are not personally liable for the company's debts.
• Separate Legal Entity: The company exists independently of its members — it can own property, enter contracts, and sue or be sued in its own name.
• No 'Limited' Suffix Required: Operates without adding 'Limited' or 'Private Limited' to its name, yet retains full limited liability status.
• Perpetual Succession: The company continues to exist regardless of changes in membership or directorship.
• Higher Credibility: Governed by strict compliance requirements including mandatory annual audits — making it more trustworthy in the eyes of donors, government bodies, and corporates.
• Foreign Nationals as Directors: Allowed with proper KYC compliance.
• For-Profit Subsidiary Allowed: A Section 8 Company can invest in and hold a for-profit subsidiary company.
• Can be Holding Company: A Section 8 Company can promote and be a holding company of another company.
• No Minimum Capital Requirement: The company can be incorporated with any amount of capital.
• No Stamp Duty on Incorporation: Most states exempt Section 8 Companies from stamp duty on MOA and AOA.
• Income Tax Exemption (Section 12A): After registration under Section 12AA, the company's income becomes exempt from income tax.
• Donor Tax Deduction (Section 80G): Once 80G registration is obtained, donors can claim 50% tax deduction on donations — attracting greater contributions.
• FCRA Registration: Eligible to receive foreign donations after 3 years of operation, subject to FCRA compliance.
• CSR Eligible: Corporate companies can direct their Corporate Social Responsibility (CSR) funds to registered Section 8 Companies.
• FDI Permitted: Foreign Direct Investment (FDI) is allowed, subject to FEMA regulations.
• External Commercial Borrowings (ECB): Can access ECB subject to RBI/FEMA guidelines.
Section 8 Companies enjoy significant exemptions compared to regular companies:
Provision
Exemption for Section 8 Company
Minimum/Maximum Directors
No prescribed limit (Section 149(1) not applicable)
Independent Director
Not mandatory (Section 149(4)-(13) not applicable)
Board Meetings per Year
Minimum 2 (1 every 6 months), vs 4 for regular companies
AGM Notice Period
14 days (vs 21 days for regular companies)
Financial Statements Notice
14 days before AGM (vs 21 days)
Nomination & Remuneration Committee
Not required (Section 178 not applicable)
Stakeholders Relationship Committee
Not required even with 1000+ members
Company Secretary Qualification
Need not be ICSI member (Section 2(24) not applicable)
Directorship Count (Section 165)
Directorships in Section 8 Companies not counted toward the ceiling of 20
Board Meeting Quorum
8 directors or 25% of total strength, whichever is lower (minimum 2)
Resolutions by Circulation
Borrowing, investing funds, and granting loans can be decided by circulation
Secretarial Standards
Not applicable (Section 118 exempted)
Service
Approximate Cost (INR)
Digital Signature Certificate (DSC) per director
₹1,000 – ₹1,500
Director Identification Number (DIN)
₹500 – ₹1,000
Name Reservation (RUN / SPICe+)
₹1,000
Government Fees — MOA, AOA, Incorporation
₹2,000 – ₹4,000
Section 8 License Fee (INC-12)
Newspaper Advertisement (INC-26)
₹1,500 – ₹3,000
Notary & Stamp Paper Charges
₹1,500 – ₹2,000
Professional Fees (CA / CS)
₹8,000 – ₹15,000
Total Estimated Cost
₹17,500 – ₹30,500 (approx.)
Note: These are approximate figures. Actual fees vary depending on the state, number of directors, capital amount, and professional charges chosen.
Registration as a Section 8 Company does not automatically confer income tax exemption. Separate registrations under the Income Tax Act are required to unlock tax benefits.
Under Section 12AA of the Income Tax Act, 1961, a Section 8 Company can apply to the Commissioner of Income Tax for registration. Upon approval, the company's income is exempt from income tax. The company can also accumulate up to 15% of its income for future application to its objectives — this is treated as expenditure in the year it is set apart.
Key requirements for 12A registration:
• The entity must be legally in existence
• A written instrument of creation (MOA/AOA) must exist
• All objects must be charitable or religious
• Income and assets must be applied only toward the stated objectives
• On dissolution, net assets must not revert to founders/members but must go to another charitable entity
Once 80G registration is obtained from CBDT, donors making contributions to the company can claim a 50% deduction on their taxable income. This significantly incentivizes donations and enhances the company's fundraising capacity.
To receive donations or contributions from foreign sources, the company must register under the Foreign Contribution Regulation Act (FCRA), 2010. FCRA registration is typically available after the company has been in existence for at least 3 years. In urgent cases, prior permission can be sought from the Commissioner.
Additional Income Tax Provisions Applicable to Section 8 Companies:
• Section 2(15): Definition of 'charitable purpose' includes education, medical relief, environment preservation, and advancement of public utility objects.
• Section 11(1A): Favorable treatment of capital gains — if entire net consideration is reinvested into new capital assets, the gain is treated as applied for charitable purposes.
• Section 11(4A): Business income incidental to charitable objectives is eligible for exemption under Section 11 — provided separate books of accounts are maintained.
• Sections 35(1)(ii) & (iii): Deductions for expenditure on approved scientific research institutions.
• No specific exemption from Excise Duty, Service Tax, Customs Duty, TDS, or TCS — these apply as they would for any other company.
Parameter
Section 8 Company
Trust
Society
Best
Governing Law
Companies Act, 2013
Indian Trusts Act, 1882
Societies Reg. Act, 1860
—
Registration Authority
MCA (Central Govt.)
Sub-Registrar / Court
State Registrar
Minimum Members
2 Directors
2 Trustees
7 Members
Section 8
Credibility
Highest
Medium
Governance Structure
Board of Directors
Trustees
Managing Committee
Stamp Duty
Exempt (most states)
Nominal
Minimum Capital
None
Equal
Annual Compliance
High (ROC filings)
Low
Trust / Society
80G / 12A Eligible
Yes
FCRA Eligible
Yes (after 3 years)
Foreign Director Allowed
Yes (with restrictions)
Varies by state
Corporate Governance
Strongest
Weak
Moderate
CSR Funding Eligible
Yes (preferred)
Conditional
Conclusion: For organizations seeking maximum credibility, corporate governance, access to CSR funds, government grants, and foreign donations, Section 8 Company is the superior choice.
A Section 8 Company must comply with the Companies Act, 2013 on an ongoing basis. Non-compliance can attract heavy penalties and, in serious cases, license revocation.
Compliance Requirement
Board Meetings
Minimum 2 per year (at least 1 every 6 months)
Annual General Meeting (AGM)
Mandatory each financial year; 14 days' notice required
Annual Return (Form MGT-7)
Filed with ROC within 60 days of AGM
Financial Statements (Form AOC-4)
Balance sheet, P&L, and Cash Flow filed with ROC
Income Tax Return
Annual IT return filing mandatory
Statutory Audit
Mandatory every year by a Chartered Accountant
12A / 80G Renewal
May require periodic renewal per new CBDT rules
Director KYC (DIR-3 KYC)
Annual KYC for every Director
Books of Accounts
Must be maintained for at least 8 financial years; accrual basis only — cash basis not permitted
XBRL Filing (if applicable)
Required if the company is listed or meets specified capital/turnover thresholds
Secretarial Audit (if applicable)
Required if listed, or paid-up capital ≥ ₹50 crore, or turnover ≥ ₹250 crore
CSR Compliance (Section 135)
Applicable if net worth ≥ ₹500 crore, or turnover ≥ ₹1,000 crore, or net profit ≥ ₹5 crore
Note: Minutes of board and general meetings must be recorded within 30 days of the conclusion of each meeting where the Articles provide for confirmation by circulation.
The following entities can be converted into a Section 8 Company:
• Partnership Firm, LLP, Trust, Society, and Co-operative Society
• Existing companies registered under Companies Act, 1956 or 2013
Process: File Form INC-12 for license, publish newspaper advertisement (Form INC-26), obtain ROC approval, and re-register as Section 8 Company.
Note: An OPC cannot directly convert into a Section 8 Company. It must first convert into a Private/Public Company.
A Section 8 Company may convert into a Private Limited Company, Public Limited Company, or other permitted structure, subject to:
• Passing a Special Resolution at a general meeting
• Filing Form INC-18 with the Regional Director
• Publishing notice in Form INC-19 in newspapers
• Sending notice to tax authorities, Charity Commissioner, and Chief Secretary
• Obtaining NOC from relevant authorities where special privileges were enjoyed
• Surrendering all tax exemptions, privileges, and concessions from the date of conversion
Direct conversion to a One Person Company (OPC) is not permitted under Rule 7(1) of the Companies (Incorporation) Rules, 2014.
Under Section 8(10), a Section 8 Company can amalgamate only with another Section 8 Company having similar objects. Amalgamation with a non-Section 8 Company is not permitted. 'Similar objects' is interpreted broadly — the objects of both companies must fall within the categories specified in Section 8(1)(a).
There is no restriction on demerging a division of a Section 8 Company. However, by analogy with Section 8(10) and the conditions of the license (Form INC-16), the demerged entity should also be registered under Section 8 with similar objects.
On winding up, after satisfaction of all debts and liabilities, any remaining assets must be:
• Transferred to another Section 8 Company with similar objects, subject to NCLT conditions, OR
• Sold, with proceeds credited to the Insolvency and Bankruptcy Fund (under Section 224 of the Insolvency and Bankruptcy Code, 2016)
Note: The Fast Track Exit (FTE) mode for defunct companies is not available to Section 8 Companies. However, the ROC can strike off the name of a defunct Section 8 Company on a suo moto basis under Section 248 of the Companies Act, 2013.
• Domestic Donations: No restriction — can accept donations from Indian individuals, companies, or institutions.
• Foreign Donations (FCRA): Permitted after 3 years, with FCRA registration. Prior permission from the Commissioner is available in urgent cases.
• CSR Funds: Registered Section 8 Companies are eligible to receive CSR contributions from companies meeting the threshold under Section 135.
• Equity Funding: Can issue new shares at a premium to raise capital.
• Member Loans: A Section 8 Company can borrow from its members and pay reasonable interest — subject to Chapter V of the Companies Act.
• Government Grants: Eligible to apply for state and central government grants.
• External Commercial Borrowings (ECB): Permitted subject to RBI/FEMA compliance.
• Non-Convertible Debentures (NCDs): A Section 8 Company can list NCDs issued on a private placement basis on a stock exchange.
• FDI: Foreign Direct Investment is allowed subject to FEMA regulations.
Important: Section 8 Companies cannot raise funds through public deposits.
Violation / Offence
Penalty / Consequence
Contravention of Section 8 provisions (Company)
Fine of not less than ₹10 lakh, extendable up to ₹1 crore
Contravention of Section 8 provisions (Director / Officer in Default)
Imprisonment up to 3 years, or fine between ₹25,000 and ₹25 lakh, or both
Fraudulent conduct of affairs
Section 447 applies — imprisonment of 6 months to 10 years + fine equal to or up to 3x the fraud amount (non-compoundable offence)
License Revocation by Central Government
Company must add 'Limited' or 'Private Limited' to its name; Central Government may also order winding up or amalgamation
Misuse of Section 8 status / Public interest violation
Licence revoked; NCLT may order winding up
Form Number
INC-12
Application for Section 8 License (new company or conversion)
INC-13
Draft Memorandum of Association (MOA) for Section 8 Companies
INC-14
Professional Declaration by Practicing CA / CS / CMA
INC-15
Declaration by each applicant (on stamp paper, notarized)
INC-16
License issued by Registrar of Companies (new company)
INC-17
License issued for existing company converting to Section 8
INC-18
Application to Regional Director for conversion out of Section 8
INC-19
Newspaper notice for conversion (published by company)
INC-20
Filing ROC with Regional Director's approval for conversion
INC-26
Advertisement / Notice in newspaper (during application process)
MGT-14
Filing Special Resolution with ROC
SPICe+ (Part A & B)
Online company incorporation form
DIR-3
Application for Director Identification Number (DIN)
AOC-4
Annual filing of Financial Statements with ROC
MGT-7
Annual Return filing with ROC
With all documents in order, the entire process typically takes 25–30 working days. The Section 8 license itself (INC-12 stage) usually takes 7–15 days, which is the longest step.
No. There is no minimum share capital requirement for incorporating a Section 8 Company. Even a nominal amount such as ₹10,000 is sufficient to begin.
No. Since Section 8(1)(b) and (c) prohibit distribution of profits and payment of dividends, issue of bonus shares is not permitted.
Yes — the company can pay bonuses to its employees. However, if an employee is also a member of the company, they cannot receive a bonus in their capacity as a member.
Yes, provided it complies with applicable RBI guidelines and directions. The microfinance activities must be in furtherance of the objects specified in Section 8(1)(a).
No. This is a key privilege of Section 8 Companies — they can operate without 'Limited' or 'Private Limited' in their name, while still enjoying full limited liability protection under the Companies Act.
Yes. A foreign not-for-profit body corporate can promote and register a separate Section 8 Company in India as a distinct legal entity, subject to FEMA compliance. Note that a branch/liaison office of a foreign entity opened in India for non-profit activities is not treated as a 'foreign company' under Section 2(42) since no business activity is conducted.
Yes — by passing a special resolution. However, prior approval of the Registrar of Companies is required. If the alteration results in conversion of the company to another kind of company, prior approval of the Regional Director (delegated from Central Government) is required.
Yes. If a Section 8 Company meets the thresholds prescribed in Section 135 (net worth ≥ ₹500 crore, or turnover ≥ ₹1,000 crore, or net profit ≥ ₹5 crore), it must comply with CSR provisions. This applies even if the company itself is engaged in charitable activities.
No. Under Section 8(10), a Section 8 Company can only amalgamate with another Section 8 Company having similar objects. Amalgamation with a non-Section 8 company is strictly prohibited.
After satisfying all debts and liabilities, any residual assets are transferred to another Section 8 Company with similar objects (subject to NCLT conditions), or the proceeds from sale of assets are credited to the Insolvency and Bankruptcy Fund.
No. Section 128 of the Companies Act, 2013 requires all companies — including Section 8 Companies — to maintain their books of accounts on accrual basis using the double entry system of accounting.
Yes, but only if the Section 8 Company is listed, or is a public company with paid-up share capital of ₹50 crore or more, or has a turnover of ₹250 crore or more. In such cases, a Secretarial Audit Report must be annexed to the Board's Report.
Yes. Existing Section 25 companies do not need to obtain a fresh license under Section 8 of the Companies Act, 2013. Their registrations and licenses issued under the 1956 Act are protected under Section 465 of the Companies Act, 2013.
The quorum for board meetings is either 8 directors or 25% of the total strength — whichever is lower. The quorum shall not be less than 2 members in any case.
A Section 8 Company represents the gold standard for non-profit incorporation in India. It combines the credibility and governance framework of a corporate entity with the mission-driven purpose of a charitable organization. Whether you are an individual, a corporate house looking to set up a CSR vehicle, or an organization seeking to scale social impact, Section 8 Company registration gives you the best legal foundation.
With benefits like no stamp duty, no minimum capital, income tax exemption (12A), donor tax deduction (80G), access to CSR funds, FCRA eligibility, limited liability, and separate legal identity, a Section 8 Company is a powerful and versatile structure for anyone committed to creating positive change in India.
Section 8 Company — Quick Reference Summary:
• Governed by: Companies Act, 2013
• Regulatory Authority: Ministry of Corporate Affairs (MCA)
• Registration Time: 25–30 working days
• Minimum Capital: None
• Minimum Members: 2 (Private), 3 (Public)
• Name Suffix: 'Limited' / 'Private Limited' not required
• Tax Exemption: Section 12A (Company), Section 80G (Donors)
• Foreign Funding: FCRA registration required (after 3 years)
• Stamp Duty: Exempt in most states
• Compliance: Annual ROC filings, statutory audit, IT return
• Amalgamation: Only with another Section 8 Company (similar objects)
• Winding Up: Residual assets transferred to similar Section 8 entity or IBC Fund
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Disclaimer
This article is for informational purposes only and does not constitute legal advice. Laws and regulations are subject to change. For specific legal guidance, consult a qualified Company Secretary or Advocate. Always refer to the latest MCA notifications and official government sources.
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