Section 8 Company: How to Register a Non-Profit Company in India
Understanding Section 8 Company in India:
In India, non-profit organisations play a vital role in promoting social welfare, education, healthcare, environmental protection, and community development. Among the various structures available for non-profits, the Section 8 Company in India has become one of the most preferred. It is governed under the Companies Act, 2013, and is specifically designed for charitable and non-profit purposes.
At My Finance Gyan, we believe that understanding the right legal structure is the first step to making a lasting social impact. That is why we bring you the latest updates and simplified guidance on how to register and manage a Section 8 Company effectively. With clear compliance guidelines and tax advantages, it stands out as a professional and reliable structure for NGOs, trusts, and other non-profit initiatives.
Meaning of a Section 8 Non-Profit Organization:
A Section 8 Company definition is given under the Companies Act, 2013. It states that if a company is formed to promote commerce, art, science, sports, education, research, social welfare, charity, or protection of the environment, and intends to apply its profits for these objectives without paying dividends to its members, such a company is registered as a Section 8 Company. In simple terms, a Section 8 Company is a non-profit company formed to promote activities that benefit society. Unlike regular companies, the profits of a Section 8 entity cannot be distributed to members or shareholders. Instead, all earnings must be used only for the organisation’s charitable objectives.
Advantages of a Section 8 Company:
Registering as a Section 8 Company in India offers multiple benefits compared to trusts and societies. Some of the key Section 8 company features are:
- Legal Recognition: Section 8 Companies are incorporated under the Companies Act, 2013, which gives them higher credibility than a trust or society.
- Limited Liability: Members have limited liability protection, which means their assets remain safe in case of financial issues.
- Tax Exemptions: These companies enjoy several tax benefits, including eligibility to apply for exemptions under Sections 12AA and 80G of the Income Tax Act.
- Foreign Funding: Section 8 Companies can easily apply for FCRA registration to receive foreign contributions.
- Transparency: Regular compliance and filing of the Section 8 company ITR form ensures accountability, which builds trust among donors and stakeholders.
- Separate Legal Entity: The company exists independently of its members, which provides stability and continuity.
Eligibility Criteria for Registration:
Before applying for incorporation, it is important to check if you meet the eligibility criteria:
- A minimum of two directors and two shareholders are required.
- At least one director must be a resident of India.
- The company must have an objective of promoting charitable or social welfare purposes.
- Profits, if any, must only be used for these objectives.
- No dividend can be distributed to members.
Documents Required for a Section 8 Company in India:
To register a Section 8 Company, the following documents are required:
- PAN Card of directors and shareholders.
- Aadhaar Card, Passport, Voter ID, or Driving Licence as identity proof.
- Latest utility bill or bank statement as address proof.
- Passport-size photographs of directors.
- Proof of registered office (rent agreement/ownership proof along with utility bill).
- Digital Signature Certificate (DSC) of all directors.
- Director Identification Number (DIN).
Key Requirements for Incorporation:
The incorporation of a Section 8 Company in India requires compliance with the Companies Act, 2013. Some important requirements include:
- Drafting of the Memorandum of Association (MOA) and Articles of Association (AOA) that clearly define the company’s non-profit objectives.
- Obtaining approval of the Central Government (through the Registrar of Companies) for a Section 8 licence.
- Ensuring that the name of the company is unique and does not resemble any existing company or trademark.
Purpose of Section 8 Company Registration Forms:
The Ministry of Corporate Affairs (MCA) has made it easier to register a Section 8 Company using SPICe+ forms. These forms integrate multiple services, including name reservation, incorporation, DIN allotment, PAN, and TAN application. The purpose of these forms is to simplify the process and reduce the time required for incorporation. Earlier, applicants had to file separate forms for different services, but now everything is integrated.
Essential Forms Needed for Registration:
Some important forms used in the incorporation process are:
- SPICe+ (INC-32): For incorporation of the company.
- INC-13: Memorandum of Association.
- INC-31: Articles of Association.
- INC-12: Licence application.
- INC-14 & INC-15: Declarations by professionals and directors.
- AGILE-PRO: For GST, ESIC, EPFO, bank account, and professional tax registration (if applicable).
Step-by-Step Process for Incorporation:
Here is a detailed step-by-step process for registering a Section 8 Company in India:
- Obtain DSC and DIN for all proposed directors.
- Apply for name reservation using Part A of the SPICe+ form.
- Draft MOA and AOA clearly stating the objectives.
- File INC-12 along with the required documents to obtain a Section 8 licence.
- Submit the SPICe+ form (INC-32) with all documents and declarations.
- Apply for PAN and TAN along with incorporation.
- Once approved, the Certificate of Incorporation is issued by the Registrar of Companies (ROC).
Annual Compliance for Section 8 Companies:
After incorporation, a Section 8 Company must follow annual compliance to maintain transparency. Key compliance includes:
- Filing of the Section 8 company ITR form within the due date.
- Filing Form AOC-4 for financial statements.
- Filing Form MGT-7 for annual return.
- Maintaining proper books of accounts.
- Conducting board meetings and general meetings as per the law.
Non-compliance can lead to penalties or even cancellation of the Section 8 licence.
Tax Benefits for Section 8 Company:
One of the biggest Section 8 company benefits is taxation relief. Some key tax advantages include:
- Exemption under Section 12AA of the Income Tax Act for income generated from charitable activities.
- Donors contributing to the company can claim deductions under Section 80G.
- GST exemptions on certain activities related to education, health, and charitable work.
- Reduced scrutiny from tax authorities due to regular compliance.
Final Thoughts:
A Section 8 Company in India is the best choice for entrepreneurs, philanthropists, and social workers who want to make a meaningful impact on society. It combines legal recognition, transparency, and tax advantages while ensuring that funds are utilised only for charitable purposes. With the right guidance, registering and managing a Section 8 Company becomes a smooth process.
At My Finance Gyan, we keep our readers updated with the latest rules and compliance updates from the MCA and Income Tax Department to ensure you make informed decisions. If you are planning to register your non-profit or need legal assistance with compliance, taxation, or filings, you can seek help from Startup Portal Business Services, a trusted partner for Section 8 Company registration and professional support.
