Section 8 company: what it is, how to register one, and what it must file

Section 8 of the Companies Act, 2013 lets the Central Government license a company formed to promote commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment or a similar object, on three conditions: its profits and other income are applied only to those objects, no dividend is ever paid to members, and it may drop the words Limited or Private Limited from its name.

It is a company in every other sense: a separate legal person, with limited liability, directors, members, a registered office, audited accounts and filings with the Registrar. It can be limited by shares or by guarantee, and there is no minimum capital.

1. Digital signatures for the proposed directors and subscribers.
2. Name in SPICe+ Part A. The name must end with a word such as Foundation, Forum, Association, Federation, Chambers, Confederation or Council, in place of Limited.
3. SPICe+ Part B with the licence application built in: the memorandum in Form INC-13 and the articles, a declaration in INC-14 by a practising professional, declarations in INC-15 by each subscriber, and an estimate of income and expenditure for the next three years with the sources of funds.
4. The Registrar issues the certificate of incorporation with the Section 8 licence number, PAN and TAN. Many states exempt the memorandum and articles of a Section 8 company from stamp duty.

Expect ten to fifteen working days. The objects clause is where applications are returned: it must describe charitable activity specifically, and must not read as a business with a charitable label.

• 12A (now 12AB). Without it, the company’s surplus is taxed like any other company. Apply in Form 10A for provisional registration, valid three years, then Form 10AB for the regular five-year registration once activities begin.
• 80G. Lets donors deduct their donations. Same forms and cycle. Donations must then be reported in Form 10BD by 31 May and certificates issued in Form 10BE.
• CSR-1. Required to receive corporate social responsibility funds as an implementing agency, and available once the company has 12A and 80G; companies generally look for a three-year track record.
• FCRA. Foreign contributions need registration under the Foreign Contribution (Regulation) Act, available after three years of activity, or prior permission for a specific grant before that, and a designated account with the State Bank of India, New Delhi main branch.
• NGO Darpan ID from NITI Aayog for government grants.

Everything a private company files: board meetings, an annual general meeting, a statutory audit, AOC-4 and MGT-7 with the Registrar; see our annual compliance checklist. On the tax side, the return is ITR-7 by 31 October with an audit report in Form 10B or 10BB by 30 September, at least 85 percent of income must be applied to the objects during the year or accumulated by filing Form 10, and no benefit may pass to founders, trustees or their relatives.

Breaching the conditions of section 8 is expensive: a fine on the company of ₹10 lakh to ₹1 crore, and on directors and officers ₹25,000 to ₹25 lakh, with imprisonment up to three years where fraud is shown. The licence can be revoked, after which the company is wound up or merged with another having similar objects; its assets can never be distributed to members.

Our Section 8 registration service covers the incorporation, the objects drafting and the 12A, 80G and CSR-1 applications, from ₹4,999.