Not-for-profit companies: Overview

A not-for-profit company in India is incorporated under Section 8 of the Companies Act 2013 for purposes such as charity, education, science, sports, art and social welfare. Profits cannot be distributed as dividend and must be applied to the company's objects. Incorporation requires a licence from the Regional Director via Form INC-12 along with SPICe+ on the MCA V3 portal. To unlock tax benefits, separate registrations under Sections 12A and 80G of the Income-tax Act, plus FCRA registration for foreign funds, are required.

Mayank Wadhera

Published: 7 Sept 2023

Updated: 16 May 2026

4 min read

Not-for-profit companies in India are incorporated under Section 8 of the Companies Act, 2013, which is the modern replacement for the old Section 25 of the 1956 Act. They blend the governance discipline of a private limited company with the charitable purpose of a trust or society, and have become the preferred vehicle for serious CSR-funded initiatives, foundation work and impact-focused organisations because of their MCA-registered identity and access to FCRA registration.

Core Features of a Section 8 Company

A Section 8 company is registered with the express object of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other useful object. The defining features are:

Profits and other income are applied solely toward the company's objects.
No dividend can be distributed to members at any time.
On winding-up, surplus assets must be transferred to another Section 8 company with similar objects, not to members.
Lower MCA fees apply on incorporation and many ongoing filings.
The word "Limited" or "Private Limited" is omitted from the name; permitted suffixes include Foundation, Association, Council, Federation, Forum.

Incorporation Process on MCA V3

The process resembles a private limited but includes a Section 8 licence from the Regional Director. Key steps:

Reserve the name through SPICe+ Part A on the MCA V3 portal, using a permitted suffix.
Prepare a detailed memorandum of association setting out objects and a draft three-year activity plan with projected income and expenditure.
File SPICe+ Part B together with the licence application in Form INC-12.
Submit AGILE-PRO-S for GST, EPFO, ESIC, profession tax and bank account opening.
On approval, the company receives both the licence and the Certificate of Incorporation along with PAN, TAN and a current account.

Tax and FCRA Registrations You Will Want

A Section 8 company by itself does not get any tax exemption. The exemption flow runs through separate income-tax registrations:

Section 12A registration: exempts the income of the company from income tax to the extent applied to charitable objects.
Section 80G registration: allows donors to claim deduction of 50% (or 100% in specified cases) of donations made.
Section 10(23C) registration: alternative regime for specified educational and medical institutions.
Section 35(1) registration: for scientific research organisations.
FCRA registration under the Foreign Contribution (Regulation) Act, 2010: required to accept foreign donations, with a minimum existence and activity history before eligibility.

Ongoing Compliance

Section 8 companies follow the standard MCA compliance calendar — AOC-4 within 30 days of AGM, MGT-7 within 60 days of AGM, DIR-3 KYC by 30 September, statutory audit, and event-based filings — plus an additional layer of trust-style compliance:

Income-tax Form 10B audit report (for 12A-registered entities).
Form 10BD/10BE annual statement of donations (for 80G entities).
FCRA annual return Form FC-4 where applicable.
CSR reporting on the MCA portal if the entity receives CSR contributions from companies.

CSR Funding Eligibility

A Section 8 company that has been in existence for at least three years and has either an 80G registration or an established track record is eligible to receive CSR contributions from companies under Section 135. Donor companies require CSR-1 registration of the implementing agency before they disburse funds. Building the three-year activity record early is critical if CSR is part of your funding model.

Comparison with Trusts and Societies

Section 8 companies are not the only vehicle for non-profit work in India — public charitable trusts under the Indian Trusts Act and societies under the Societies Registration Act remain widely used. Each has trade-offs. Trusts are simpler to form but governance is loose and amendments are difficult. Societies are democratic but lack pan-India presence and are perceived as less professional by global donors and CSR teams. Section 8 companies offer the strongest combination of governance, credibility and CSR-funding access.

Trust: simple deed, single state, limited amendment flexibility, lighter compliance.
Society: democratic, member-led, weaker for centralised governance, state-bound.
Section 8 company: corporate-grade governance, pan-India, FCRA/CSR-friendly, higher cost.
LLP: not appropriate for charitable purposes — profits cannot be applied to objects in same way.
Choice depends on donor profile, geographic spread and required governance maturity.

Conclusion

A Section 8 company gives your charitable mission the credibility of a corporate entity, access to CSR money, and a clean path to 12A, 80G and FCRA registrations. The compliance load is real but predictable. Plan for the three-year track-record requirement, layer the tax and FCRA registrations strategically, and treat governance with the same rigour as a private limited — donors and grant-makers will respond.

Frequently Asked Questions

What is a Section 8 company?

A Section 8 company is a private or public limited company incorporated for charitable, educational, scientific, religious, sports or social welfare objects. It cannot distribute dividends, and on winding-up its surplus assets must be transferred to another Section 8 company. It is the modern equivalent of the older Section 25 company under the 1956 Act.

Does a Section 8 company get automatic tax exemption?

No. Tax exemption requires a separate registration under Section 12A of the Income-tax Act. Donor deduction eligibility requires Section 80G registration. Foreign contributions require FCRA registration with the Ministry of Home Affairs. Each is applied for separately, with its own conditions and renewal cycles.

Can a Section 8 company receive CSR contributions?

Yes, provided it has been registered with the MCA as a CSR implementing agency under Form CSR-1, has been in existence for at least three years and meets certain track-record or 80G requirements. Donor companies must verify CSR-1 status before disbursing CSR funds under Section 135.

What ongoing compliances apply to a Section 8 company?

Annual filings include AOC-4 within 30 days of AGM, MGT-7 within 60 days of AGM, DIR-3 KYC by 30 September, statutory audit, plus income-tax Form 10B for 12A entities, Form 10BD/10BE for 80G donations, FCRA annual return Form FC-4 where applicable, and CSR reporting on the MCA portal.