It is a company whose objective is not to earn profit but to promote art, culture, welfare, education, charity, sports, science etc. It is an NPO – Non-Profit Organisation.

• Section 8 Company can receive the donation and donner will avail tax deduction for the same.
• There is no minimum capital requirement for the section 8 company.
• Since it is government approved section 8 company has more credibility.
• Directors in section 8 companies do not add a count for limit in their maximum number of directorship.
• There are many exemptions and grants from the government e.g. stamp duties for registration is exempt.
• In the case of section 8 company liability of members is limited.

Following are a few major restrictions on section 8 company:

• The company can not distribute dividends or members can not make any profit from the company.
• The government have many guidelines and rules which needed to be followed otherwise Section 8 company’s license might be cancelled.
• Any change in objective or internal rules regulation i.e. AOA or MOA can not be changed without government approval.
• There is taxability as a normal company.

There are societies or trusts other than section 8 companies that can be formed and considered NGOs or NPO. The major difference in them are as below:

• Legal Compliance and fillings – Sec 8 company has to follow more compliance and fillings in comparison to trust or society.
• Cost – Out of NGO, trust and Sec 8 Company, the company has the highest cost of managing.
• Since there is more transparency in the Company Government grants and Foreign donation is more favourable in the case of the company.

It takes approx. 30 days after all documentation is completed.