A Section 8 Company in India is a type of not-for-profit organization formed to promote commerce, art, science, sports, education, research, social welfare, religion, charity, or environmental protection. These companies are governed by Section 8 of the Companies Act, 2013, and provide a well-structured, credible legal entity for charitable activities.
Eligibility Criteria
To incorporate a Section 8 Company, the following conditions must be satisfied:
1. Charitable Purpose: Main object must be for social or charitable promotion.
2. No Profit Motive: Profits, if any, must be used solely for objectives.
3. No Dividend: Members cannot receive profits or dividends.
4. Minimum Members:
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- Private Limited: At least 2 directors
- Public Limited: At least 3 directors
- Directors can be non-residents; however, at least one director must be a resident in India.
Key Features
| Feature | Description |
| Governing Law | Companies Act, 2013 |
| Regulatory Authority | Ministry of Corporate Affairs (MCA) |
| Objective | Charitable / Non-Profit |
| Profit Distribution | Not allowed – profits reinvested |
| Suffix | No “Private Limited” or “Limited” |
| Legal Structure | Can be Private Limited or Public Limited |
Process for Incorporation
1. Digital Signature Certificate (DSC)
Required for all directors and subscribers.
2. Director Identification Number (DIN)
Apply through SPICe+ (INC-32) form.
3. Name Reservation
Apply via RUN or Part A of SPICe+.
Name should reflect a charitable purpose (e.g., Foundation, Association, Forum).
4. Prepare Key Documents:
- MOA (INC-13)
- AOA
- Declaration by professional (Form INC-14)
- Subscriber declaration (INC-15)
- Estimated 3-year income & expenditure
5. File with ROC via SPICe+:
- INC-32 (SPICe+)
- INC-13, INC-31
- AGILE-Pro S for GST, EPFO, ESIC, Bank Account
6. ROC Approval
After review, the license under Form INC-16 is issued.
7. Certificate of Incorporation Issued
The Section 8 Company incorporation comes into legal existence.
Documents Required
- PAN and Aadhaar of directors/members
- Passport-sized photographs
- Address proof (Bank statement)
- Utility bill of registered office
- Rent agreement & NOC (if rented)
Benefits of a Section 8 Company
- Tax Exemptions: Eligible under Section 12A & 80G of the Income Tax Act
- Credibility: Highly trusted by stakeholders and foreign funders
- Separate Legal Entity: Independent existence from its members
- Limited Liability: Member liability is limited to their share
- Less Compliance: Certain relaxations and exemptions under law
Post-Incorporation Compliance
- Apply for PAN & TAN
- Open a bank account
- Obtain 12AA and 80G registrations for tax benefits
- Maintain statutory books of accounts
- Conduct Board Meetings & Annual General Meetings
- File annual returns and financial statements with the ROC
What is FCRA?
FCRA stands for Foreign Contribution (Regulation) Act. It’s a law in India that keeps a check on how foreign money is received and used by individuals, non-profits, or organizations in India.
Therefore, if an NGO or trust in India is getting donations from another country, they must register under FCRA. The government wants to make sure that this foreign money is used only for the right purpose like charity, social work, education, health, etc.
Why is it important?
1. National Security: To make sure no foreign funds are used for anti-India activities or spreading hate, violence, or unrest.
2. Transparency: It helps track who is receiving foreign money and how they are using it.
3. Genuine Work Only: Only those doing real, honest work for society should get foreign donations.
4. Prevents Misuse: Some people could misuse donations for personal gain or political purposes—FCRA keeps a check on that.
5. Trust Building: When an NGO is FCRA-compliant, it builds trust with donors (in India and abroad) that their money is going to a genuine cause.
In short, FCRA is like a gatekeeper—it allows foreign donations but keeps a close watch to ensure everything stays clean, fair, and for the good of society.
Basic Eligibility Criteria for FCRA Registration
To receive foreign contributions, a Section 8 Company must meet the following:
1. Legal Registration: – Must be registered under the Companies Act, 2013, Societies Act, or Indian Trusts Act.
2. FCRA Bank Account: – Must open a designated FCRA account with State Bank of India, Main Branch, and New Delhi.
3. Minimum Operational History
- Existence of at least 3 years
- Minimum spending of ₹15 lakhs in core activities over last 3 financial years
4. Capital Asset Inclusion
- Capital assets like land, building, and equipment may be counted towards ₹15 lakhs
- Undertaking must confirm the use and retention of these assets exclusively for FCRA objectives
5. Tax Exemption Proof: – Must possess a valid 12A certificate for income tax exemption.
Documents Required for FCRA Upload
| Document | |
| 1. | Registration Certificate |
| 2. | MOA / Trust Deed |
| 3. | Activity Report for past 3 years |
| 4. | Audited Financial Statements (3 years) |
| 5. | Affidavit of Key Functionaries |
| 6. | Signature of Chief Functionary |
| 7. | Official Seal of Association |
| 8. | Names & addresses of managing persons (past and present) |
| 9. | CA Certificate (if expenditure is not activity-wise in statements) |
| 10. | Affidavit under Rule 9(1)(f)(ii) if ₹15 lakh threshold is met via capital assets |
Tax Benefits of a Section 8 Company
| Section | Benefit |
| Section 12A | Income of the NGO is exempt, subject to registration |
| Section 80G | Donors get a 50%-100% deduction on donations |
| GST Exemption | Available for certain charitable services |
| Lower Compliance Cost | Relaxations on certain filings and disclosures |
Conclusion
A Section 8 Company is a legally robust, tax-advantaged structure for promoting social causes in India. Its eligibility for foreign donations through FCRA, income tax exemptions, and its credibility make it ideal for individuals or groups looking to create a long-lasting impact in sectors like education, health, environment, and human rights.
Whether you’re an NGO, start-up social entrepreneur, or philanthropist, incorporating under Section 8 can be a strategic step towards transparent and scalable social change.
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About the Author: The author is Ruchika Bhagat, FCA helping foreign companies in setting up and closing businesses in India and complying with various tax laws applicable to foreign companies while establishing a business in India. Neeraj Bhagat & Co. Chartered Accountants is a well-established Chartered Accountancy firm founded in the year 1997 with its head office in New Delhi.
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