Section 8
Difference between Section 8 and NGO
November 21, 2025524 views
Many people think “NGO” and “Section 8 company” mean the same thing, but they’re actually different. An NGO is a broad term for any non-governmental organisation working for social causes, whereas a Section 8 company is a specific type of legal structure for non-profit organisations registered under the Companies Act, 2013.
Overview
"NGO" is a broad term that simply refers to any non-governmental organisation working for a social cause. It covers a wide variety of legal structures in India, including Trusts, Societies, and Section 8 companies. In contrast, a Section 8 company is a specific type of nonprofit organisation registered under the Companies Act, 2013, and recognised for its formal governance and regulatory requirements. You can register an NGO as a Trust, Society, or Section 8 company . Each has its own rules, benefits, and requirements. If you're planning to start a non-profit organisation in India,
Quick takeaway:
- NGO = General term for non-profit organisations (can be a Trust, Society, or Section 8)
- Section 8 Company = A specific corporate structure for NGOs under the Companies Act
- All Section 8 companies are NGOs, but not all NGOs are Section 8 companies
Meaning of NGO
NGO stands for Non-Governmental Organisation. It's a voluntary, non-profit organization that works independently from the government to address social, cultural, environmental, or humanitarian issues.
Key Characteristics of NGOs
- Operate independently of government control
- Work for public benefit, not private profit
- Focus on social welfare, education, healthcare, environment, and human rights.
- Cannot distribute profits to members or directors
- Funded by donations, grants, membership fees, and CSR contributions
Types of NGO Structures in India
1. Trust
Registered under the Indian Trusts Act, 1882 or state trust laws Minimum 2 trustees required Managed by trustees according to a Trust Deed Best for: Small-scale charitable work, religious organisations, family-run charities
2. Society
Registered under the Societies Registration Act, 1860 Minimum 7 members required Managed by a Governing Body Best for: Membership-based organisations, cultural activities, community welfare
3. Section 8 Company
Registered under the Companies Act, 2013 Minimum 2 directors required Managed by the Board of Directors like a company Best for: Professional NGOs, organisations that need CSR funding Registration: With the Ministry of Corporate Affairs (MCA)
Meaning of Section 8 Company
A Section 8 company is a special type of non-profit company registered under Section 8 of the Companies Act, 2013. This structure is best suitable for organisations that want the credibility of a company but with charitable objectives instead of profit-making goals.
Simply because it's governed by Section 8 of the Companies Act, it is henceforth named as ‘Section 8’. Before 2013, these were called "Section 25 companies" under the old Companies Act, 1956.
Main objectives of a Section 8
Promoting commerce, art, science, and sports Education and research Social welfare and charity Environmental protection Religion and culture
Features of Section 8 Company
- No minimum capital requirement, so you can start with as little as ₹1,000
- Unlike regular companies, it is not mandatory to add "Private Limited" or "Limited" in the name.
- Separate legal entity - The company exists independently from its members
- Directors and members are not personally liable for company debts beyond their contributions
- Perpetual succession - The organisation continues to exist even if members change
- It has a proper structure, including the Board of Directors, shareholders, and governance
- Government license required before incorporation
- Stricter compliance is necessary to file annual returns, maintain proper accounts, and conduct audits
Understanding the Difference Between Section 8 and NGO
When you register a Section 8 company, you are creating an NGO. But when you register an NGO, you need to choose among a Trust, Society, or Section 8 company as your structure.
| Aspect | NGO (General) | Section 8 Company (Specific) |
| Legal Status | Can be Trust, Society, or Section 8 | Specific corporate entity under the Companies Act, 2013 |
| Governing Law | Various acts (Trusts Act, Societies Act, Companies Act) | Companies Act, 2013 |
| Registration Authority | State authorities (for Trust/Society) or MCA (for Section 8) | Ministry of Corporate Affairs (MCA) |
| Minimum Members | 2 for Trust, 7 for Society, 2 for Section 8 | 2 directors |
| Legal Structure | Varies - can be informal (Trust) to formal (Section 8) | Formal corporate structure with shareholders and directors |
| Governance | Trustees (Trust), Governing Body (Society), or Board (Section 8) | Board of Directors |
| Liability | Trustees may have personal liability (in Trust) | Limited liability for all members |
| Compliance | Moderate (Trust/Society) to High (Section 8) | Higher, including annual filings, audits, and board meetings, are mandatory |
| Fundraising | All can receive donations and grants | Better positioned for CSR funds and institutional grants |
| Stamp Duty | Applicable (Trust/Society) | Exempt from stamp duty |
Conclusion
If you're planning for robust growth and seeking foreign grants, Section 8 can be the right choice. However, if you're starting small and local, a Trust or Society might be perfect. Remember, the best structure is the one that aligns with your vision, resources, and long-term goals. Consider consulting with an online legal agency, such as NGOExperts which can guide you to make the right choice for your specific situation.
Frequently Asked Questions (FAQs)
Q1: Is the Section 8 company an NGO?
A: Yes, a Section 8 company is a type of NGO. It's a non-profit organisation registered under the Companies Act, 2013, specifically for promoting charitable and social welfare objectives.
Q2: Can I convert my Trust into a Section 8 company?
A: Not directly. You cannot "convert" a Trust to Section 8. However, you can register a new Section 8 company and transfer the assets and operations from the Trust, subject to legal procedures and approvals.
Q3: Which is better - NGO or Section 8 company?
A: NGO is the general category, and Section 8 is a specific type. The answer depends on your scale, funding needs, and compliance capacity.
Q4: Do Section 8 companies need to pay taxes?
A: Section 8 companies can get tax exemption under Section 12A of the Income Tax Act if they register properly.