Difference Between a Section 8 Company and an NGO?

When it comes to serving a social cause or contributing to community welfare, establishing an NGO is a preferred legal route in India. But many individuals and organizations often face confusion while choosing between different legal forms of NGOs—especially when deciding between a Section 8 Company and other forms like Trusts or Societies.

This article explains the key differences between a Section 8 Company and an NGO, the purpose behind each structure, their legal status, and how section 8 company registration and ngo registration differ in terms of compliance, governance, and recognition.

What is an NGO?

An NGO (Non-Governmental Organization) is a broad term that refers to any non-profit, voluntary group formed to promote social, educational, religious, or charitable objectives. In India, NGOs can be registered under one of the following legal structures:

• Trust (under the Indian Trusts Act, 1882)

• Society (under the Societies Registration Act, 1860)

• Section 8 Company (under the Companies Act, 2013)

So, a Section 8 Company is actually one specific type of NGO—but with unique characteristics and legal standing.

What is a Section 8 Company?

A Section 8 Company is a special category of company formed for charitable or not-for-profit purposes. It is registered under Section 8 of the Companies Act, 2013 with the Ministry of Corporate Affairs (MCA). The key objective of such a company is to promote commerce, arts, science, sports, education, research, social welfare, religion, charity, and environmental protection—without any intention of distributing profits.

Unlike regular companies, a Section 8 Company:

• Does not pay dividends to its members

• Must reinvest any surplus into promoting its objectives

• Has stricter regulatory and compliance frameworks

Section 8 company registration provides higher credibility to the organization, especially when applying for government funding, CSR donations, or FCRA approval.

Key Differences Between Section 8 Company and Other NGO Structures

Below is a detailed comparison between a Section 8 Company and other types of NGOs like Trusts and Societies.

1. Governing Law

• Section 8 Company: Governed by the Companies Act, 2013

• Trust: Governed by the Indian Trusts Act, 1882

• Society: Governed by the Societies Registration Act, 1860

This means section 8 company registration involves approval from the MCA, while ngo registration for Trusts and Societies is done at the state level.

2. Registration Authority

• Section 8 Company: Ministry of Corporate Affairs (MCA)

• Trust: Sub-Registrar of the area

• Society: Registrar of Societies of the concerned state

Since MCA is a central authority, section 8 company registration offers pan-India recognition and enhanced legal standing.

3. Minimum Members Required

• Section 8 Company: Minimum 2 directors and shareholders

• Trust: Minimum 2 trustees

• Society: Minimum 7 members from different states (for national-level societies)

The ngo registration requirements for Trusts and Societies are more relaxed, making them easier to set up at a local level.

4. Legal Status and Recognition

• Section 8 Company: Strong legal identity, often preferred by foreign donors, government agencies, and corporates

• Trust/Society: Recognized, but generally have lower credibility in formal or international environments

For NGOs seeking long-term funding or CSR partnerships, section 8 company registration is usually more beneficial.

5. Compliance and Regulation

• Section 8 Company: Must maintain statutory records, file annual returns with ROC, and follow audit guidelines

• Trust/Society: Less rigorous compliance norms, especially for smaller organizations

While ngo registration for Trusts or Societies may seem easier, lack of compliance can affect credibility and funding opportunities.

6. Tax Benefits

All three types of NGOs can apply for 12A (income tax exemption) and 80G (donor tax exemption) certificates. However, a Section 8 Company is more likely to get faster approval due to its structured governance and transparency.

Which Structure is Right for You?

Choosing between section 8 company registration and other forms of ngo registration depends on several factors:

Cost and Time Frame

• Section 8 Company Registration: ₹7,000 to ₹15,000 (government + professional fees); takes 15–30 days

• Trust Registration: ₹3,000 to ₹8,000; takes 7–15 days

• Society Registration: ₹4,000 to ₹10,000; takes 15–20 days

While section 8 company registration is slightly costlier and time-consuming, it offers long-term advantages in terms of funding and compliance.

Post-Registration Compliance

All NGOs—regardless of the structure—need to:

• Apply for PAN and TAN

• Open a dedicated bank account

• Obtain 12A and 80G registration

• Apply for FCRA (if accepting foreign donations)

• File income tax returns and maintain records

However, section 8 company registration requires stricter adherence to ROC filings, board meetings, and annual audits.

Final Thoughts

While all forms of ngo registration serve the core purpose of promoting social welfare, a Section 8 Company stands out due to its formal structure, legal credibility, and acceptance among donors and regulatory bodies.

If you're looking to start an NGO with serious long-term goals—be it national expansion, foreign funding, or large-scale impact—then section 8 company registration is the ideal route. On the other hand, if you're aiming for a simple, community-level initiative with limited operations, a Trust or Society may serve you well.

Regardless of the path you choose, proper ngo registration is the foundation of trust, accountability, and effective operations. Make sure to understand your goals, compare structures, and move ahead with the registration that aligns with your vision.

Let me know if you'd like me to include a section on how NGOExperts can help with registration, or if you want a comparison table image or infographic format.