Section 8 company: meaning, objects and licence
A Section 8 company is a non-profit company formed to promote charity, education, science and similar objects. It cannot pay dividends and needs a licence.
Short answer
A Section 8 company is a company formed under section 8 of the Companies Act, 2013 to promote commerce, art, science, sports, education, research, social welfare, religion, charity, environmental protection or similar objects. It must apply its profits only to those objects, cannot pay dividends to members, and needs a Central Government licence.
- Governed by
- Section 8, Companies Act 2013
- Dividends
- Prohibited
- Name
- Need not use Limited; may use Foundation, Forum and similar words
- Minimum capital
- None
How a Section 8 company works
A Section 8 company can be private or public, and it is incorporated through SPICe+ with the licence application processed alongside. It needs at least two directors and two members if private. Its income and property must be applied solely towards its objects, and members may receive only reasonable remuneration for services actually rendered.
If it breaches the licence conditions or carries on its affairs fraudulently, the government can revoke the licence under section 8(6) and order it to be wound up or amalgamated.
Section 8 company versus trust or society
NGOs in India can also register as trusts under state trust laws or as societies under the Societies Registration Act. A Section 8 company is generally seen as more credible by donors and corporate CSR teams because it follows company law governance, files audited accounts with the ROC and has limited liability. The trade-off is greater compliance.
Why it matters for founders
Registration as a Section 8 company does not by itself make income tax-exempt. To claim exemption and allow donors a deduction, the company must separately apply for registration and approval under the income-tax law, and it may need CSR-1 registration to receive CSR funds. Plan these approvals with incorporation, because donors and CSR partners usually ask for the tax registrations before releasing funds.
Related services
Sources
Written by the Refogo Editorial Team from the official sources above and checked on 2026-10-31. Laws, rates and due dates change, and authorities often extend deadlines, so confirm your own case with a qualified professional. This is general information, not legal or tax advice. Read our editorial policy or report an error to support@refogo.com.
Common questions
Can a Section 8 company make a profit?
Yes, it can generate surplus, but the surplus must be applied to its objects and cannot be distributed to members.
Is a Section 8 company automatically tax-exempt?
No. It must obtain separate registration under the income-tax law to claim exemption.
Can a Section 8 company convert into a normal company?
Yes, but only with Central Government approval and conditions, including treatment of accumulated assets and past tax benefits.