Section 8 Company (NGO) – Complete Registration Guide India 2025

By CleverCoins | Tax & Compliance Experts | clevercoins.org

Category: Company Registration | Tax Exemptions | NGO Compliance

What is a Section 8 Company?

A Section 8 Company is a type of Non-Profit Organisation (NPO) or Non-Governmental Organisation (NGO) incorporated under Section 8 of the Companies Act, 2013. Unlike a regular private or public limited company, a Section 8 Company is formed with the specific objective of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other charitable object.

The most important feature of a Section 8 Company is that it cannot distribute its profits or dividend among its members. Instead, all profits and income must be applied solely for promoting the objectives for which it was established.

This structure gives Section 8 Companies a significant edge over other NGO formats such as Trusts and Societies because it carries the credibility of being regulated under the Ministry of Corporate Affairs (MCA) and enjoys a more robust legal framework.

Section 8 Company vs Trust vs Society – Quick Comparison

Key Objectives for Which Section 8 Company Can Be Formed

Under Section 8 of the Companies Act, 2013, a company can be registered if its objectives include one or more of the following purposes:

• Promotion of commerce, arts, crafts, and trade
• Advancement of education and literacy
• Scientific research and development
• Social welfare and poverty alleviation
• Environmental protection and conservation
• Promotion of sports and athletics
• Religious activities and cultural promotion
• Healthcare and medical relief services
• Women empowerment and child welfare programs
• Rural development and sustainable livelihood

Advantages of Section 8 Company Registration

There are numerous compelling reasons why social entrepreneurs, NGO founders, and charitable organizations prefer the Section 8 Company structure:

1. Tax Exemptions

Section 8 Companies can apply for income tax exemptions under Section 12A and Section 80G of the Income Tax Act, 1961. Donors to a Section 8 Company registered under 80G can claim deductions on their taxable income, making it much easier to attract donations and CSR funding.

2. Separate Legal Entity

Unlike a Trust or Society, a Section 8 Company is a legally recognized separate entity. It can own property, enter into contracts, sue and be sued in its own name. This gives it superior legal standing.

3. No Minimum Capital Requirement

There is no mandatory minimum paid-up capital required to form a Section 8 Company. You can incorporate it with just the subscription amount mentioned in the Memorandum of Association (MoA).

4. Credibility and Donor Trust

Being regulated by MCA and filing annual financial statements publicly on the MCA portal enhances transparency. This credibility is crucial when applying for government grants, CSR funds from corporations, and international donor funding.

5. Perpetual Succession

A Section 8 Company has perpetual succession, meaning it continues to exist even if members leave or pass away. The organization is not dependent on individual members for its existence.

6. FCRA Registration Eligibility

Section 8 Companies are eligible to apply for FCRA (Foreign Contribution Regulation Act) registration, allowing them to receive foreign donations and grants from international organizations and foundations.

7. CSR Funding from Corporates

Companies required to spend on Corporate Social Responsibility (CSR) activities under Section 135 of the Companies Act prefer to donate to registered entities. A Section 8 Company with 80G and 12A registration is an ideal vehicle for CSR funding.

Who Can Incorporate a Section 8 Company?

Any Indian citizen or resident who wishes to work for a social cause can promote a Section 8 Company. Specifically:

• Minimum 2 Directors (for a private company structure)
• Minimum 7 members if opting for a public company structure
• At least one director must be a resident of India (stayed for 182+ days in the preceding year)
• No criminal record or disqualification under Companies Act
• Digital Signature Certificate (DSC) and Director Identification Number (DIN) are mandatory

Documents Required for Section 8 Company Registration

The following documents are needed for all proposed Directors and Members:

For Directors/Members (Individual):

• PAN Card (mandatory)
• Aadhaar Card or Voter ID or Passport (Identity Proof)
• Latest Bank Statement or Utility Bill (Address Proof – not older than 2 months)
• Passport-size photographs (2 copies)
• Digital Signature Certificate (DSC)
• Director Identification Number (DIN) – if not already held

For Registered Office:

• Ownership proof: Sale Deed / Property Tax Receipt
• Rent Agreement (if rented) + NOC from the owner
• Latest utility bill (electricity/water) – not older than 2 months

Additional Documents:

• Draft Memorandum of Association (MoA) outlining objectives
• Draft Articles of Association (AoA) outlining governance rules
• Subscriber Sheet signed by all subscribers
• Affidavit from each Director (INC-9 Form)
• Written declaration from all directors (DIR-2 Form)

Step-by-Step Process for Section 8 Company Registration

The registration process is entirely online through the MCA portal (mca.gov.in). Here is the complete procedure:

Step 1: Obtain Digital Signature Certificate (DSC)

All proposed directors must first obtain a Class 3 DSC from authorized certifying authorities like eMudhra, Sify, or NCode. The DSC is needed to digitally sign all e-forms filed with MCA. Processing time is typically 1-2 working days.

Step 2: Apply for Director Identification Number (DIN)

Every director must have a unique DIN. For new directors, DIN can be applied through the SPICe+ form during company incorporation itself. For existing directors, use DIR-3 KYC form.

Step 3: Name Reservation via RUN (Reserve Unique Name)

Apply for name approval through the RUN-INC service on MCA portal. The name should end with words like ‘Foundation’, ‘Association’, ‘Organisation’, ‘Society’, ‘Council’, ‘Club’, ‘Charities’, ‘Institute’, ‘Federation’, etc. It should be unique and not identical to any existing company or trademark.

Step 4: Drafting MoA and AoA

The Memorandum of Association (MoA) defines the objectives of the company. The Articles of Association (AoA) defines the internal governance and management rules. Both documents must be carefully drafted by a professional to align with the charitable objectives and ensure MCA approval.

Step 5: File SPICe+ (Simplified Proforma for Incorporating Company Electronically)

The SPICe+ form is the integrated form for company incorporation. It covers: name reservation, DIN allotment, PAN & TAN application, EPFO & ESIC registration, GST registration, bank account opening (via AGILE-PRO-S linked form), and company registration – all in one form.

Step 6: File AGILE-PRO-S Linked Form

AGILE-PRO-S (Application for Goods and services tax Identification number, Employees’ state insurance corporation registration, Employees’ provident fund Organisation registration, Profession tax registration and opening of Bank Account) is filed along with SPICe+ for simultaneous registrations.

Step 7: INC-20A – Declaration for Commencement of Business

After incorporation, the company must file INC-20A (Declaration of Commencement of Business) within 180 days of the Certificate of Incorporation (CoI). This is mandatory and failure to file attracts a penalty of Rs. 50,000 on the company and Rs. 1,000 per day on each defaulting director.

Step 8: Apply for Section 12A and 80G Registration (Income Tax)

Post-incorporation, apply online with the Income Tax Department for: 12A Registration – grants the NGO income tax exemption on its surplus income; 80G Registration – enables donors to claim 50% deduction on their donations. Both are applied through Form 10A on the Income Tax portal (incometax.gov.in).

Government Fees for Section 8 Company Registration

Timeline for Section 8 Company Registration

Annual Compliance Requirements for Section 8 Company

A Section 8 Company has mandatory statutory and regulatory compliance obligations every year. Non-compliance attracts heavy penalties, disqualification of directors, and even striking off of the company.

With Ministry of Corporate Affairs (MCA):

• MGT-7 / MGT-7A: Annual Return – within 60 days of AGM
• AOC-4: Financial Statements – within 30 days of AGM
• ADT-1: Auditor Appointment – within 15 days of AGM
• DIR-3 KYC: Director KYC – annually by 30th September
• Annual General Meeting (AGM) – within 6 months of financial year end
• Maintenance of statutory registers and minute books

With Income Tax Department:

• Annual ITR Filing (ITR-7 for Section 8 / NGOs)
• Tax Audit if gross receipts exceed Rs. 1 Crore
• Renewal of 80G Registration every 5 years (Form 10AB)
• Annual Statement of Donations received (Form 10BD)
• Certificate of Donation to donors (Form 10BE)

With GST Department (if GST registered):

• GSTR-1, GSTR-3B filing (if registered under GST)
• GST registration mandatory if annual turnover exceeds Rs. 20 Lakhs
• Many NGO activities may be GST-exempt – consult your CA

Common Mistakes to Avoid During Section 8 Company Registration

• Choosing a company name that is already registered or trademarked
• Using generic or prohibited words in the company name
• Not aligning MoA objectives precisely with charitable purposes
• Providing incorrect address proof documents (outdated bills)
• Not obtaining NOC from premises owner before registration
• Delaying INC-20A filing after getting CoI
• Not applying for 12A and 80G registration immediately after incorporation
• Ignoring annual compliance deadlines, leading to late fees and penalties
• Distributing surplus income among members (strictly prohibited)

Can a Section 8 Company Receive Foreign Donations?

Yes. A Section 8 Company can receive foreign contributions, but it must first obtain FCRA (Foreign Contribution Regulation Act) registration from the Ministry of Home Affairs. Key requirements for FCRA registration include:

• The company must be at least 3 years old
• Must have spent a minimum of Rs. 15 Lakh on charitable activities in the preceding 3 years
• Must have a designated FCRA bank account with State Bank of India, New Delhi Main Branch
• Annual FCRA returns must be filed within 9 months of the financial year end

Tax Benefits for Donors to a Section 8 Company

One of the strongest selling points for fundraising is the donor tax benefit. Here is a summary:

How CleverCoins Can Help You Register a Section 8 Company

At CleverCoins (clevercoins.org), we provide end-to-end Section 8 Company registration services with complete guidance, documentation, and filing support. Our package includes:

• Detailed eligibility consultation and name search
• DSC procurement support for all directors
• Complete drafting of MoA and AoA tailored to your objectives
• SPICe+ and AGILE-PRO-S filing with MCA
• Post-incorporation compliance support (INC-20A, PAN, TAN)
• Application for 12A and 80G Income Tax Registration
• GST registration support for NGO activities
• Annual compliance calendar and reminder service

Contact us today at clevercoins.org to speak with our tax and compliance experts and get your Section 8 Company registered the right way.

Frequently Asked Questions (FAQs)

Q1: Is GST applicable on Section 8 Company?

GST exemption is available for many charitable and social welfare activities. However, if the NGO provides taxable services (like training, events, consultancy) with turnover exceeding Rs. 20 Lakhs, GST registration and payment becomes mandatory. Consult a GST expert to determine your specific situation.

Q2: Can Section 8 Company pay salary to its directors or employees?

Yes. Section 8 Companies can pay reasonable salaries to their employees and even directors, as long as this is disclosed properly and does not amount to distribution of profits. The salary must be commensurate with the work done.

Q3: What happens if a Section 8 Company distributes its profits?

If a Section 8 Company distributes profits or dividends to its members, it is in violation of its license and the Companies Act. The company’s license can be revoked, and the company may be wound up. Directors can face criminal penalties.

Q4: Can a Section 8 Company be converted into a private limited company?

A Section 8 Company cannot simply convert into a profit-making company. Conversion requires prior approval of the Central Government (Regional Director), and the company must meet several conditions, including repayment of tax concessions availed.

Q5: What is the validity of 80G registration?

From April 1, 2021, 80G registration is granted provisionally for 3 years initially. After that, a permanent 5-year registration is granted upon meeting all conditions. Renewal must be applied in Form 10AB before expiry.

Q6: Is it mandatory to have a physical office for Section 8 Company?

Yes. A valid registered office address is mandatory. It can be a residential address if permitted. The address must be verifiable through utility bills, NOC, and rent agreement as applicable.