Non-profit incorporation

Category: Business Registration. From ₹9,999. Typical timeline: 14–21 days.

Overview

A Section 8 Company is a non-profit entity incorporated under the Companies Act, 2013 to promote charitable objects such as education, social welfare, environment or research, without distributing profits to its members. It offers a more structured and credible governance framework than a trust or society, which makes it easier to receive institutional grants, CSR funding and FCRA approval.

Who needs it

• Founders setting up NGOs, foundations or non-profit research organisations
• Educational institutions and skill-development bodies seeking a formal legal structure
• Groups seeking CSR funding or FCRA registration for foreign contributions
• Social enterprises that want corporate governance credibility without profit distribution

Eligibility

• Minimum two directors for a private limited structure or three for a public structure
• Objects must be charitable — education, art, science, sports, social welfare, environment protection or similar
• Profits and income must be applied only towards promoting the objects, with no dividend to members
• License under Section 8 from the Central Government (via RoC) is mandatory before incorporation

Documents required

• PAN and Aadhaar of directors/promoters
• Detailed note on proposed charitable objects and activities
• Projected income and expenditure statement for the next three years
• Proof of registered office address
• DSC and DIN of directors

Process

1. Name reservation and license application — Apply for name approval and Section 8 license via SPICe+ Part A along with INC-12 declarations.
2. Drafting MoA and AoA — Prepare MoA in Form INC-13 clearly stating charitable objects and the non-distribution clause.
3. SPICe+ filing — File SPICe+ Part B with supporting declarations for incorporation.
4. License and incorporation certificate — RoC grants the Section 8 license and issues the Certificate of Incorporation together.

Government fees

• SPICe+ incorporation and Section 8 license filing: As per MCA fee schedule — depends on authorised capital
• Stamp duty on MoA/AoA: Varies by state
• DSC for directors: As per certifying authority charges

Professional fee

Kanoons charges ₹9,999 for complete Section 8 company registration including drafting of objects, MoA/AoA and RoC filings.

Timeline

Incorporation typically takes 14–21 working days due to the additional Section 8 license approval step beyond standard company incorporation.

Deliverables

• Section 8 License and Certificate of Incorporation
• MoA (Form INC-13) and AoA
• PAN and TAN of the company
• Guidance note on 12A/80G registration next steps

Frequently asked questions

Can a Section 8 company distribute profits to members?

No, all income must be applied solely towards the charitable objects; profit distribution as dividend is prohibited.

Is 12A/80G registration automatic on incorporation?

No, these are separate registrations filed with the Income Tax Department after incorporation to obtain tax exemption and donor deduction benefits.

Can a Section 8 company be converted into a private limited company?

Conversion is possible but requires prior approval from the Regional Director and fulfillment of specific conditions under the Companies Act.

Common mistakes

• Drafting vague objects that do not clearly qualify as charitable
• Assuming tax exemption applies automatically without separate 12A/80G registration
• Underestimating the license approval timeline when planning fund inflows
• Not maintaining separate books distinguishing charitable activity from any incidental income

Penalties for non-compliance

• Violation of Section 8 conditions can lead to license revocation by the Central Government
• Officers in default can face fine and, in serious cases, action under Section 8(11) of the Companies Act
• Failure to apply income towards stated objects can jeopardise 12A/80G exemption status

Legal references

• Companies Act, 2013, Section 8 — companies with charitable objects
• Companies (Incorporation) Rules, 2014, Rule 19-20 — license and formation procedure
• Income Tax Act, 1961, Sections 12A and 80G — exemption and donor deduction (separate registration)

Client reviews

Thanks to their legal and financial guidance, our NGO now receives corporate donations and government grants.Sunil R., Client