Register a Section 8 company for your non-profit

Law

Section 8, Companies Act 2013

Minimum people

2 members and 2 directors (private)

Minimum capital

No minimum

Typical time

15 to 30 working days

Why NGOs choose a Section 8 company

A non-profit in India can be a trust, a society or a Section 8 company. All three can obtain tax exemption, but the Section 8 company has clear advantages for organisations that plan to scale:

• Central law: it is governed by the Companies Act across India, while trusts and societies depend on state laws that vary widely.
• Transparency: its directors, financial statements and annual returns are on the public MCA register, which donors and CSR teams check.
• Governance: board structure, meetings and audit are defined by law, which reassures funders.
• Limited liability: members and directors are generally protected from the organisation's debts.

The trade-off is compliance: annual ROC filings and audit apply whether the organisation has income or not.

Section 8 company, trust or society

A small, family-run charity often does well as a trust. An organisation seeking CSR partnerships, government grants and a professional board usually prefers a Section 8 company.

Objects, licence conditions and restrictions

The licence is granted on conditions that stay with the company for life:

• Its objects must fall within section 8, such as commerce, art, science, sports, education, research, social welfare, religion, charity or protection of the environment.
• Profits and other income must be applied only to promote those objects.
• No dividend can be paid to members, and members cannot receive any part of the income by way of profit.
• Payment of reasonable remuneration for services actually rendered and reimbursement of expenses is allowed.
• Altering the memorandum or articles needs the prior approval of the Registrar.
• On winding up, surplus assets go to another Section 8 company with similar objects, not to the members.

The Registrar can revoke the licence under section 8(6) if the company breaches these conditions or conducts its affairs fraudulently, and the company and officers face substantial penalties. The name usually includes words such as Foundation, Forum, Association, Federation, Council or Chamber, and does not need to end with "Limited".

How a Section 8 company is incorporated

1. Plan the objects: we draft objects that are specific enough to satisfy the Registrar and wide enough for your future programmes.
2. Name reservation: through SPICe+ Part A or RUN, with a name that reflects non-profit objects.
3. Documents: memorandum in Form INC-13, articles, a declaration by a practising professional in INC-14, a declaration by each subscriber and director in INC-15, and an estimate of income and expenditure for the next three years.
4. SPICe+ filing: INC-32 with the attachments and AGILE-PRO-S. DINs, PAN and TAN are allotted through the same filing.
5. Licence and incorporation: the licence in INC-16 and the certificate of incorporation are issued together after scrutiny.
6. After incorporation: bank account, INC-20A within 180 days where applicable, first auditor and board meeting.

Tax exemption, donor deduction and CSR-1

Incorporation does not by itself make the company's income tax-free. Two separate registrations under income-tax law are needed, both now governed by the Income-tax Act, 2025 from 1 April 2026:

• Registration for exemption (earlier known as 12A or 12AB registration), so that income applied to charitable objects is exempt.
• Approval for donor deduction (earlier known as 80G approval), so that donors can claim a deduction for their donations.

New organisations usually receive provisional registration first and apply for regular registration within the period allowed, once activities have started. Conditions on accumulation of income, application of funds, books of account and audit apply throughout.

To receive CSR funds from companies, the organisation must register with the MCA in Form CSR-1, which requires it to hold the income-tax registration and approval described above. If you plan to receive foreign donations, you also need FCRA registration or prior permission under the Foreign Contribution (Regulation) Act, 2010, which has its own eligibility conditions.

Mistakes that cost NGOs their exemptions

• Vague or commercial objects: objects that read like a business, or that are too general, invite queries at incorporation and problems at the income-tax registration stage.
• Spending outside the objects: money spent on activities not covered by the objects, or for the private benefit of founders and relatives, can lead to loss of tax exemption and revocation of the licence.
• Cash donations without records: donor details and receipts must be kept properly, and cash receipts above the limits in income-tax law can deny donors their deduction.
• Delaying the tax registrations: income received before registration for exemption may be taxable, so apply soon after incorporation.
• Using foreign money without FCRA: even a small foreign donation can breach the FCRA if received without registration or permission.
• Treating the company as dormant: annual ROC filings are compulsory even in a year with no activity, and continued defaults can lead to the company being struck off and directors being disqualified.

Ongoing compliance

Every year, a Section 8 company holds board meetings and an annual general meeting, gets its accounts audited, files AOC-4 and the annual return, completes director KYC and files its income-tax return. It must keep its activities and spending in line with its objects, maintain records of donations, and file the reports its tax registration and any FCRA registration require. Our ROC annual compliance service combines these into one calendar.

Costs

The government cost is mainly DSCs and stamp duty on the memorandum and articles, which varies by state and in some states is reduced for Section 8 companies. Professional fees depend on the drafting involved. We give a written quote covering incorporation and, separately, the income-tax registrations and CSR-1.

Documents you need

For each subscriber and director, and for the organisation:

• PAN card and Aadhaar of each subscriber and director
• Recent bank statement or utility bill as address proof
• Passport-size photographs
• Registered office proof and no-objection letter from the owner
• Brief note on the proposed objects and planned activities
• Estimated income and expenditure for the next three years
• For a corporate or institutional subscriber: board resolution and incorporation documents

How we handle it for you

1. Objects workshop

   We discuss your programmes and draft objects that fit section 8 and future funding.

2. Name and DSC

   Name search, reservation and digital signatures for the founders.

3. Drafting

   INC-13 memorandum, articles, INC-14, INC-15 and financial projections prepared.

4. Filing and licence

   SPICe+ filed and followed until the licence and certificate are issued.

5. Tax and CSR setup

   Applications for income-tax registration, donor approval and CSR-1 prepared after incorporation.

Why clients choose ProudLegal

Frequently asked questions