A Section 8 company is a non-profit company under Section 8 of the Companies Act, 2013, formed to promote objects such as education, charity, social welfare, science, art, sports or environment. Profits must be used only for its objects and no dividend can be paid. The licence and incorporation are obtained together through SPICe+ on the MCA portal.
What is a Section 8 company?
A Section 8 company is a company licensed by the Central Government to operate for charitable or social purposes. It enjoys the governance, credibility and limited liability of a company, which is why donors, CSR funders and foreign institutions often prefer it over trusts and societies.
Eligible objects
- Promotion of commerce, art, science, sports or education
- Research, social welfare, religion or charity
- Protection of environment
- Any other similar object
All income must be applied to these objects, and members cannot receive dividends or profits.
How registration works
- Obtain DSCs for proposed directors.
- Reserve a name through SPICe+ Part A. Section 8 names commonly include words like Foundation, Forum, Association or Council.
- File SPICe+ Part B with the licence application, e-MoA, e-AoA, projected income and expenditure for three years, and declarations.
- Receive the licence and certificate of incorporation together.
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Get expert help →Tax exemptions: 12A and 80G
Incorporation does not make income tax-free on its own. Apply for provisional registration under Section 12A (now 12AB) and approval under Section 80G using Form 10A. Provisional registration is typically valid for three years, after which regular registration is sought in Form 10AB.
Annual compliance
- Statutory audit of accounts
- AOC-4 and MGT-7 filings with the ROC
- Board meetings (relaxations apply to Section 8 companies)
- Income tax return in ITR-7 and audit report in Form 10B or 10BB
- Form 10BD donation statement if 80G approved
Frequently asked questions
Can a Section 8 company pay salaries to directors?
A Section 8 company can pay reasonable remuneration to employees and professionals for services rendered, and directors can be paid for services in some cases subject to the licence conditions and articles. It cannot distribute profits or dividends to members.
Is Section 8 better than a trust or society?
A Section 8 company offers stronger governance, easier transfer of control and higher credibility with donors, but carries more compliance. Trusts and societies are simpler and cheaper to run. The right choice depends on scale and funding sources.
Can a Section 8 company receive foreign donations?
Yes, but only after obtaining FCRA registration or prior permission from the Ministry of Home Affairs. Foreign contributions must be received in the designated FCRA account.
Can a Section 8 company be converted to a regular company?
Conversion is possible only with Central Government approval and subject to conditions, including dealing with any benefits and assets received as a non-profit. It is a closely regulated process.
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