How to Form Section 8 Company in India: A Complete Guide

A Section 8 company is a non-profit organization that promotes social welfare, charity, education, art, science, or any other purpose that benefits society. Many businesses and individuals choose to form a Section 8 company in India because it offers tax exemptions and legal credibility. If you want to establish a non-profit organization, understanding the process, requirements, and benefits is essential.

In this blog, we will provide a complete guide to the registration process, required documents, eligibility criteria, benefits, objectives, compliance requirements, and key features of a Section 8 company.

What is a Section 8 Company?

A Section 8 company is registered under the Companies Act, 2013, with the primary goal of promoting non-profit activities. Unlike other companies, it does not distribute profits to its members. Instead, any income generated is reinvested to achieve the organization’s objectives. These companies enjoy several tax benefits and operate under strict compliance requirements. It aims to promote social welfare, education, charity, art, science, and similar causes.

A Section 8 company operates under several laws and regulatory frameworks in India. These laws ensure compliance, transparency, and accountability in its functioning.

Key Laws Applicable to a Section 8 Company:

• Companies Act, 2013 – Governs the registration, management, and compliance requirements of Section 8 companies.

• Income Tax Act, 1961 – Provides tax exemptions under sections 12A, 80G, and 10(23C) for eligible non-profit organizations.

• Goods and Services Tax (GST) Act, 2017 – Applies if the company engages in any taxable activities, though exemptions exist for charitable services.

• Foreign Contribution (Regulation) Act (FCRA), 2010 – Regulates the receipt of foreign donations and mandates FCRA registration for accepting foreign funds.

• Societies Registration Act, 1860 (optional) – Some non-profits may register under this act instead of forming a Section 8 company.

• Indian Trusts Act, 1882 (optional) – Governs charitable trusts, which serve as an alternative structure to Section 8 companies.

• Labour Laws – The company must comply with labor laws such as the Employees’ Provident Fund (EPF) Act and Payment of Gratuity Act if it hires employees.

• Reserve Bank of India (RBI) Regulations – Applies if the company deals with foreign funding or transactions requiring RBI approval.

These laws ensure that Section 8 companies operate legally, maintain transparency, and fulfill their social objectives.

Before learning the registration process, it is essential to understand the eligibility criteria for forming a Section 8 company. Knowing who can apply and the necessary conditions will help ensure a smooth incorporation process. Visit Section 8 company registration to know more about the eligibility criteria and requirements.

Features of Section 8 Company

A Section 8 company has several unique characteristics that distinguish it from other types of companies. It operates as a non-profit entity and enjoys various legal and financial benefits while ensuring strict compliance with regulatory requirements. Below are the key features of a Section 8 company:

• Non-profit status: The company utilizes its profits only for charitable purposes and does not distribute them among members.

• Government license requirement: It must obtain a license from the central government before incorporation.

• Limited liability: The liability of members is limited to their contributions, protecting their personal assets.

• Separate legal entity: The company functions independently of its members, ensuring continuity even if members change.

• No minimum capital requirement: Unlike other companies, it does not require a fixed minimum capital investment.

• Tax exemptions: The company can avail of tax benefits under sections 12A and 80G of the Income Tax Act.

• Strict compliance norms: It must adhere to annual filings, audits, and reporting requirements to maintain transparency.

• Exemption from stamp duty: The company is exempt from paying stamp duty on its incorporation documents.

These features make Section 8 companies a preferred choice for organizations focused on social welfare and charitable activities.

Objectives of Section 8 Company

A Section 8 company focuses on promoting activities that benefit society rather than generating profits. It works towards various social, educational, and charitable causes while ensuring compliance with legal regulations. Organizations that aim to create a positive social impact often choose to form a Section 8 company due to its legal benefits and structured approach.

Below are the key objectives of a Section 8 company:

• Promote education: The company supports schools, colleges, research institutions, and skill development programs.

• Encourage social welfare: It undertakes initiatives to uplift underprivileged communities and improve living standards.

• Support art and culture: The organization works to preserve and promote cultural heritage, music, and literature.

• Advance science and research: It funds and facilitates scientific studies and technological innovations.

• Provide healthcare services: The company runs hospitals, medical aid programs, and awareness campaigns to improve public health.

• Protect the environment: It engages in activities related to sustainability, conservation, and climate change awareness.

• Empower rural development: The organization works on infrastructure, employment, and self-sustainability projects in rural areas.

• Promote sports and recreation: It encourages sports training, organizes tournaments, and supports athletes.

By fulfilling these objectives, a Section 8 company contributes to the overall development and well-being of society.

Required Documents to Form Section 8 Company

Registering a Section 8 company requires submitting specific legal documents to ensure compliance with regulatory authorities. To successfully form a Section 8 company, applicants must provide the necessary identification, address proof, and company-related documents. Below are the key documents required for registration:

• Director Identification Number (DIN) and Digital Signature Certificate (DSC) for proposed directors

• Memorandum of Association (MoA) and Articles of Association (AoA)

• Declaration by professionals (CA, CS, or advocate) verifying compliance

• Proof of registered office address (utility bill and rental agreement)

• Identity and address proof of directors and promoters

• Income-tax PAN and Aadhaar card of directors and promoters

Procedure to Form Section 8 Company in India

Forming a Section 8 company involves several legal steps to ensure compliance with the Companies Act, 2013. The process requires government approval, documentation, and adherence to specific regulations. Below is a step-by-step guide to registering a Section 8 company in India:

Step 1: Obtain a Digital Signature Certificate (DSC)

Since the entire registration process is online, all proposed directors need a Digital Signature Certificate (DSC) to sign electronic documents.

How to Apply for a DSC?

1. Visit a government-recognized Certifying Authority (like eMudhra, Sify, or NSDL).

2. Choose the DSC type (Class 3 for company incorporation).

3. Fill out the application form and submit identity proof (PAN, Aadhaar).

4. Complete video verification (if required).

5. Receive the DSC as a USB token or software-based signature.

Step 2: Apply for a Director Identification Number (DIN)

Every director must obtain a Director Identification Number (DIN) before they can be officially appointed. If the director does not have a DIN, apply through Form DIR-3 on the MCA portal.

How to Apply for DIN?

1. Go to the MCA official website.
2. Click on ‘MCA Services’ in the top menu.
3. Under ‘E-Filing’, select ‘Company Forms Download’ and download Form DIR-3.
4. Open Form DIR-3 in the MCA e-form utility and fill in the required details.
5. Upload a self-attested copy of PAN, Aadhaar, and a passport-size photo.
6. A practicing Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant must digitally sign the form
7. Upload the form on the MCA Portal

   • Log in to the MCA Portal.

   • Click on MCA Services → E-Filing → Upload e-Forms.

   • Select Form DIR-3, upload the completed form, and attach the required documents. 

8. Pay the DIN application fee.

9. The MCA verifies the application and issues the DIN.

If applying for DIN during company registration, it can be obtained through the SPICe+ (INC-32) form (explained in Step 6).

Step 3: Reserve a Unique Company Name (RUN Application)

A Section 8 company name must align with its objectives and not resemble any existing entity.

How to Apply for Name Approval?

1. Log in to the MCA portal and select the RUN (Reserve Unique Name) service.

2. Propose two names in order of preference.

3. Provide details of the company’s objectives and activities.

4. Pay the name reservation fee (₹1,000).

5. MCA officials review the application, and if approved, the name is reserved for 20 days.

Step 4: Draft the Memorandum & Articles of Association (MoA & AoA)

These documents define the company’s objectives, structure, and governance rules. A Section 8 company’s MoA must clearly state that its income will be used for social purposes.

1. MoA (Memorandum of Association): Outlines the company’s objectives and the intended charitable activities.

2. AoA (Articles of Association): Defines the rules, responsibilities, and governance structure of the company.

Both documents must be stamped and signed by all directors and promoters.

Step 5: Apply for Section 8 License (Form INC-12)

Before incorporation, the company must obtain a Section 8 license from the MCA.

How to File Form INC-12?

1. Log in to the MCA portal and download Form INC-12 (MCA Services → Company Forms Download → INC-12)

2. Attach the following documents:

   • Draft MoA & AoA

   • Declaration by CA/CS in Form INC-14 (confirming compliance with laws)

   • Declaration by directors in Form INC-15

   • Estimated income & expenditure statement for the next 3 years

   • Open Form INC-12 in the MCA e-form utility, fill out the details and attach all the required documents.

   • Digitally sign the form using DSC.

   • Upload the form on the MCA Portal (MCA Services → E-Filing → Upload e-Forms → Form INC-12)

3. Pay the government fee (₹2,000 for small companies, ₹5,000 for others).

4. Submit the application for review. Once approved, MCA issues a Section 8 license.

Step 6: File for Company Incorporation (SPICe+ Form INC-32)

Once the license is issued, the company must apply for incorporation.

How to File SPICe+ (INC-32) for Incorporation?

1. Log in to the MCA portal and open SPICe+ form (INC-32).

2. Fill out Part A (for name reservation) if not done earlier.

3. Fill out Part B (for incorporation), which includes:

   • Company details

   • DIN application (for first-time directors)

   • Address proof

   • PAN & Aadhaar details of directors

4. Attach digitally signed MoA & AoA.

5. Upload Form AGILE-PRO-S for:

   • EPFO (Employees’ Provident Fund)

   • ESIC (Employee State Insurance)

   • GST registration

   • Bank account opening

6. Pay the registration fee (varies based on capital investment).

7. Submit the form, and after MCA approval, receive the Certificate of Incorporation (COI) and Corporate Identification Number (CIN).

Step 7: Obtain PAN, TAN & Open a Bank Account

Once incorporated, the company must apply for:

1. Permanent Account Number (PAN) from NSDL or UTIITSL

If you don’t know how to apply for a PAN, visit our detailed guide on how to apply for PAN in India to learn the step-by-step process.

1. Tax Deduction and Collection Account Number (TAN) for tax compliance.

2. Current bank account in the company’s name (submit COI, PAN, AoA, MoA, and a board resolution to the bank).

Step 8: Apply for Tax Exemptions (Optional but Recommended)

To enjoy tax benefits, the company should apply for:

1. 12A registration (Income tax exemption for non-profits).

2. 80G registration (Allows donors to claim tax deductions).

3. FCRA registration (If receiving foreign donations).

Benefits of Section 8 Company

A Section 8 company offers several advantages, making it a preferred choice for non-profit organizations. It provides legal recognition, financial benefits, and credibility while allowing organizations to focus on social welfare. Below are the key benefits of registering a Section 8 company:

• Tax exemptions: The company qualifies for exemptions under the Income Tax Act, including benefits under sections 12A and 80G.

• Limited liability: Members have limited liability, ensuring their personal assets remain protected.

• Separate legal identity: The company functions as an independent legal entity, distinct from its members.

• No minimum capital requirement: There is no mandatory capital investment, allowing flexibility in operations.

• Credibility and recognition: The government grants a special license, increasing trust among donors and stakeholders.

• Exemption from stamp duty: Section 8 companies do not need to pay stamp duty on incorporation documents.

• Eligibility for grants and donations: These companies can receive domestic and foreign funding after FCRA approval.

By offering these benefits, a Section 8 company helps organizations achieve their social objectives efficiently.

Conclusion

Forming a Section 8 company in India is a straightforward process if you follow the required legal formalities. It provides credibility, financial benefits, and tax exemptions while allowing organizations to contribute to social causes. By ensuring compliance and maintaining transparency, you can successfully run a non-profit organization that positively impacts society.

The registration process requires careful documentation and compliance with multiple regulations. At EasetoCompliance, we simplify this process by offering end-to-end business setup services. Our expert CAs will assist you in obtaining DSC, DIN, and completing all necessary formalities to ensure a smooth registration. Whether you need help with incorporation, compliance, or tax exemptions, our team is here to guide you at every step.

Contact us today to start your company hassle-free!

FAQs on How to Form Section 8 Company in India

Q1. Who can form Section 8 company in India?

Any individual, association, or business entity can register a Section 8 company, provided they intend to work for a charitable or non-profit purpose.

Q2. What is the minimum number of directors required to register a Section 8 company?

A Section 8 company must have at least two directors if registered as a private limited company and at least three directors if registered as a pub.

Q3. What are the tax benefits of a Section 8 company?

Section 8 companies enjoy tax exemptions under sections 12A and 80G of the Income Tax Act, allowing donors to claim deductions and reducing the company’s tax burden.