{"id":16649,"date":"2026-01-08T10:32:02","date_gmt":"2026-01-08T10:32:02","guid":{"rendered":"https:\/\/www.nextgurukul.in\/thenextworld\/?p=16649"},"modified":"2026-01-19T09:24:12","modified_gmt":"2026-01-19T09:24:12","slug":"section-8-company-benefits","status":"publish","type":"post","link":"https:\/\/www.nextschool.in\/blog\/section-8-company-benefits\/","title":{"rendered":"What is Section 8 Company? Advantages & Disadvantages"},"content":{"rendered":"\r\n
If charity and social service are what you want to do, your company must fall under Section 8 of the Companies Act 2013. These companies are primarily established for charitable purposes with no minimum share capital. Here are some more details about this to help you arrive at a decision quickly.<\/p>\r\n\r\n\r\n\r\n
What is Section 8 Company?<\/strong><\/h2>\r\n\r\n\r\n\r\n
A Section 8 company is established with the aim to promote education, art, commerce and entertainment. It is a non-profit organisation that contributes to the development of humans in different walks of life.<\/p>\r\n\r\n\r\n\r\n
What are the features of a Section 8 Company?\u00a0<\/strong><\/h2>\r\n\r\n\r\n\r\n\r\n
Established for social welfare: <\/strong>These companies are solely for the purpose of social welfare. It is developed to look into the needs of the people of a community.<\/li>\r\n
No minimal capital:<\/strong> They don\u2019t require minimal capital as others do. It can be decided by its shareholders. There are no limitations on capital.<\/li>\r\n
Authorised by the government:<\/strong> They have the sanction of the government for all their processes and transactions.\u00a0<\/li>\r\n
Donations<\/strong>: Their primary source of income is donations received from the public and different organisations.<\/li>\r\n
Profit is used for the cause: <\/strong>Unlike in other companies, the amount acquired is not distributed among the members of the organisation but is used solely for its cause.<\/li>\r\n
Suffixes are optional: <\/strong>They can choose to use or omit suffixes like \u2018pvt ltd\u2019.<\/li>\r\n<\/ol>\r\n\r\n\r\n\r\n
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Here are some of the advantages and disadvantages of a Section 8 company for a better understanding.<\/p>\r\n\r\n\r\n\r\n
Advantages<\/strong><\/h2>\r\n\r\n\r\n\r\n\r\n
Tax exemption:<\/strong> They have a 30% tax exemption because of being non-profit organisations.<\/li>\r\n
No stamp duty:<\/strong> They don\u2019t have to pay any stamp duty on the Memorandum of Association.<\/li>\r\n
Easy ownership transfer: <\/strong>The process of transferring ownership is simple.<\/li>\r\n
Less share capital: <\/strong>When compared to public and private entities, they need less share capital.<\/li>\r\n
Separate entity status:<\/strong> They will be independent of their members.<\/li>\r\n<\/ol>\r\n\r\n\r\n\r\n
Disadvantages<\/strong><\/h2>\r\n\r\n\r\n\r\n\r\n
No share in profit<\/strong>: The profit isn’t shared among the members. It is used for the organisation.<\/li>\r\n
Government approval:<\/strong> Amendments in the Memorandum of Association require prior government approval.<\/li>\r\n
Zero independence:<\/strong> Rules set by the Central government have to be followed.<\/li>\r\n
Restricted usage of funds<\/strong>: Funds can be used only for the specified purpose of the organisation.<\/li>\r\n
The licence can be revoked:<\/strong> The Central government has the power to revoke a company\u2019s licence at any time.\u00a0<\/li>\r\n<\/ol>\r\n\r\n\r\n\r\n
![\"advantages-disadvantages-section-8-company\"](\"https:\/\/www.nextgurukul.in\/thenextworld\/wp-content\/uploads\/2022\/04\/advantages-disadvantages-section-8-company.png\")
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