What is the difference between 80G and 12A, and which do donors need?

12A is the income tax exemption for the organization itself — it means the NGO's income is not taxable. 80G is the donor deduction certificate — it means donors can claim 50% of their donation as a tax deduction from their own income. Both are needed: 12A for the organization's tax-free status, and 80G to attract donors with a tax benefit. Apply for both simultaneously after incorporation.

Section 8 Company Registration | NGO with Corporate Governance

Q: Can a Section 8 company be converted to a Private Limited Company?

No, a Section 8 company cannot be directly converted into a Private Limited Company. It can only be converted to a company of the same type (another Section 8) or wound up. The non-profit status is a fundamental condition of the license granted by the Central Government, and removal of that status requires surrendering the license and winding up the entity.

The Legal Framework

What Is a Section 8 Company?

A Section 8 Company is a not-for-profit entity incorporated under Section 8 of the Companies Act, 2013. The name references the original Section 25 of the Companies Act, 1956, which it replaced.

It is formed for the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, or environmental protection. The defining feature is that any profits or income generated must be reinvested into the organization's objectives — they cannot be distributed as dividends to members or directors.

Unlike trusts and societies, a Section 8 company is licensed by the Central Government through the Ministry of Corporate Affairs and must comply with the full suite of Companies Act provisions, including mandatory audits, annual returns, and board governance. This layer of accountability is precisely what gives it higher credibility with institutional donors, CSR committees, and foreign funders.

            Key distinction: A Section 8 company is a "company" in every structural sense — shareholders, directors, board meetings, auditors — but its purpose is entirely charitable. Profits stay in the mission.
          

Side by Side

Section 8 vs Trust vs Society

Three routes to non-profit status — but only one offers corporate governance, limited liability, and institutional-grade credibility.

Parameter	Section 8 Company	Trust	Society
Legal Basis	Companies Act, 2013 — Section 8	Indian Trusts Act, 1882 (Public Trusts Acts in some states)	Societies Registration Act, 1860
Registration Authority	Registrar of Companies (MCA)	Sub-Registrar / Charity Commissioner	Registrar of Societies (State Govt)
Tax Exemption (12A)	Eligible	Eligible	Eligible
Foreign Funding (FCRA)	Fully Eligible	Eligible but harder to obtain	Eligible, moderate ease
Corporate Governance	Full — Board, AGM, Audits	Minimal — Trustees only	Partial — Governing body
Limited Liability	Yes — Members protected	No — Trustees personally liable	Partial
Credibility with Donors	Highest — MCA regulated	Moderate	Moderate
CSR Fund Recipient	Preferred by corporates	Sometimes accepted	Sometimes accepted
Winding Up	NCLT process under Companies Act	Through Court / Charity Commissioner	State Registrar process

Why Choose This Structure

Built for Serious Non-Profits

Six structural advantages that make Section 8 the preferred choice for organizations seeking long-term credibility and funding access.

80G Donor Deduction

Donors can claim 50% of their donation as deduction from taxable income under Section 80G of the Income Tax Act, making your NGO significantly more attractive to individual and corporate donors.

12A Income Exemption

Once registered under Section 12A of the Income Tax Act, all income of the organization — grants, donations, programme fees — is fully exempt from income tax, provided it is applied toward charitable objectives.

FCRA Eligibility

Section 8 companies are eligible to apply for Foreign Contribution Regulation Act (FCRA) registration, enabling them to receive donations and grants from international foundations, embassies, and foreign individuals.

CSR Fund Recipient

Companies obligated to spend on CSR under Section 135 of the Companies Act strongly prefer to route funds through Section 8 companies, given the regulatory oversight and audit trail they provide.

Limited Liability

Members and directors of a Section 8 company are protected by the corporate veil. Personal assets are not at risk for the organization's liabilities, unlike in trusts where trustees can be personally liable.

Professional Governance

Mandatory board of directors, annual general meetings, statutory audits, and MCA filings create a governance structure that institutional donors, impact investors, and international partners recognize and trust.

What You Need

Documents Required

Keep these ready before filing. Our team verifies every document before submission to prevent rejection.

Founders / Directors Documents

PAN Card of all proposed directors (minimum 2, no maximum)
Aadhaar Card or Passport of all directors
Passport-size photographs of all directors (white background)
Latest bank statement or utility bill (not older than 2 months) as address proof
Email ID and mobile number of each director
Digital Signature Certificate (DSC) — Class 3 (we assist in obtaining)
Director Identification Number (DIN) — applied during incorporation
Declaration of non-conviction and disqualification (Form INC-9)

Organization Documents

Draft Memorandum of Association (MoA) — objects clause must specify charitable purpose
Draft Articles of Association (AoA) — rules for internal governance
Registered office address proof — utility bill in the company's name or NOC from property owner
Rent agreement / ownership document for registered office
Declaration by subscribers to MoA (Form INC-14) by a practicing CA/CS
Declaration by directors (Form INC-15)
Estimated income and expenditure statement for the next 3 years
Statement explaining the need for the Section 8 license (to be filed with INC-12)

How It Works

6-Step Registration Process

From name approval to operational status — a clear, linear path with no hidden steps.

Name Approval

Apply via RUN (Reserve Unique Name) on MCA portal. Name must reflect charitable purpose and not resemble existing companies.

MoA & AoA Drafting

Prepare objects clause covering all intended charitable activities. Objects must qualify under Section 8 — overly commercial objects get rejected.

INC-12 Filing

File Form INC-12 — the application for Section 8 license — with MoA, AoA, declarations, and projected financials attached.

Govt. Approval

Central Government reviews the application. Regional Director or MCA officer may seek clarification. Typical approval time: 7–14 working days.

COI Issued

Certificate of Incorporation with Section 8 status is issued. The company is now legally incorporated with a CIN (Corporate Identification Number).

80G / 12A Application

Apply immediately to the Income Tax Department for 12A and 80G registration. New provisional registration is granted within 1 month of application.

Stay Compliant

Post-Registration Obligations

Section 8 companies carry annual compliance requirements. Missing deadlines can result in penalties or license revocation.

Annual Return — MGT-7

File Form MGT-7 with the Registrar of Companies every year, detailing company particulars, shareholding, and director information.

Due: 60 days from AGM

Income Tax Return — ITR-7

File Form ITR-7 annually with the Income Tax Department. Even with 12A exemption, filing is mandatory. Include details of income applied to objectives.

Due: October 31 each year

FCRA Renewal

Foreign Contribution (Regulation) Act registration must be renewed periodically. Non-renewal results in automatic lapse and inability to receive foreign funds.

Renewal: Every 5 years

CSR Reporting

If receiving CSR funds from companies, maintain separate project-wise accounts and submit utilization certificates to the funding company's CSR committee as required.

Quarterly or as agreed

Common Questions

Frequently Asked Questions

Can a Section 8 company pay salaries to its employees?

Yes. A Section 8 company can pay market-rate salaries to its employees, including founders and directors, as long as remuneration is reasonable and approved by the board. The restriction is on distributing profits as dividends to members, not on paying fair compensation for services rendered. Salaries are treated as an organizational expense, not a profit distribution.

Can it receive foreign donations?

Yes, but only after obtaining FCRA (Foreign Contribution Regulation Act) registration from the Ministry of Home Affairs. FCRA registration is a separate process from Section 8 incorporation. Once registered under FCRA, the organization can legally accept foreign grants and donations for its charitable objectives. FCRA registration is typically applied for after the organization has been operational for at least 3 years and has a demonstrable track record.

What is the key difference from a Trust?

A Section 8 company is governed by the Companies Act 2013 and registered with the Registrar of Companies, offering corporate governance, limited liability, and higher credibility with institutional donors. A Trust is governed by the Indian Trusts Act 1882 and registered with the Sub-Registrar. Trusts are simpler and cheaper to set up but offer less regulatory oversight, no limited liability protection for trustees, and are typically less attractive to large CSR donors and international funders. Section 8 is the preferred structure for any NGO seeking scale.

Can a Section 8 company be converted to a Private Limited Company?

No. A Section 8 company cannot be directly converted into a Private Limited Company. The non-profit status is a fundamental condition of the license granted by the Central Government, and the license cannot be surrendered simply to enable profit distribution. The organization can only be wound up in accordance with the Companies Act, with residual assets transferred to another Section 8 entity. Founders who wish to later run a for-profit business must incorporate a separate company.

What is the difference between 80G and 12A — which do donors need?

12A is the income tax exemption for the organization itself — it means the NGO's own income and surplus are not taxable. 80G is the donor deduction certificate — it means donors can claim 50% of their donation as a deduction from their own taxable income. Both are needed for a fully functional NGO: 12A for the organization's tax-free operational status, and 80G to attract donors who expect a personal tax benefit. Both registrations should be applied for simultaneously after incorporation.

Register Your Mission as a Section 8 Company