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Frequently asked Questions
Yes, a Section 8 company is a type of NGO registered under the Companies Act, 2013, regulated by the Ministry of Corporate Affairs (MCA). Unlike trusts or societies, governed by state laws, it offers a corporate structure for non-profits.
There’s no “NGO Act.” Section 8 of the Companies Act, 2013, governs non-profit companies formed for charitable purposes, granting them tax exemptions and licenses to pursue social objectives.
Trusts, registered under the Indian Trusts Act, 1882, suit private or family-led charities. Section 8 companies, under the Companies Act, 2013, offer a corporate structure with limited liability, tax benefits and greater credibility for scaling non-profits.
कंपनी अधिनियम, 2013 (‘अधिनियम’) के तहत धारा 8 कंपनी के रूप में स्थापित एक गैर सरकारी संगठन कॉर्पोरेट मामलों के मंत्रालय (‘एमसीए’) द्वारा शासित होता है, जबकि ट्रस्ट या सोसायटी के रूप में पंजीकृत एनजीओ राज्य सरकार के तहत राज्य रजिस्ट्रार द्वारा शासित होता है
NGOs can register as trusts (Indian Trusts Act, 1882), societies (Societies Registration Act, 1860) or Section 8 companies (Companies Act, 2013). For tax exemptions under Sections 11 and 12AA, NGOs must register under Section 12AA of the Income Tax Act, 1961.
Trusts suit small, private charities with flexible operations. Section 8 companies are better for NGOs seeking credibility, scalability and tax benefits, but require stricter compliance. The choice depends on your goals.
Trusts are ideal for localized, less formal charities with minimal compliance. Section 8 companies offer limited liability, tax exemptions and trust among donors, making them better for large-scale non-profits.
Section 8 companies, which are meant for non-profit operations, provide a number of benefits such as tax exemption, limited liability for members and the capacity to be a separate legal entity, promoting credibility and easier fundraising.
Yes, a director of a Section 8 company is entitled to a salary. It must, however, be fair and reasonable and not the company's main purpose to make profit for its members, including the directors. Remuneration should also be sanctioned by the board of directors.
Non-Governmental Organizations (NGOs) are lawfully registered bodies formed by people, communities or institutions not connected with any government. Private donations, company sponsorships, grants or a mixture of all three normally finance them.
NGOs registered under Section 12AA of the Income Tax Act, 1961, are exempt from income tax on surplus used for charitable purposes. Section 80G certification allows donor tax deductions, boosting contributions.
Yes, a Section 8 company, which is a non-profit company, can operate a school in India since education is a public good to which all people aspire and strive towards.
