Section 8 Company Exemptions in India: 12AB, 80G, GST & Compliance

Key Takeaways

• Section 8 company exemptions fall into 4 categories — Companies Act compliance reliefs, Income Tax exemptions (12AB + 80G), GST exemptions, and state-level stamp duty concessions.
• None is automatic. Companies Act reliefs require an active Section 8 licence; tax reliefs require separate 12AB and 80G registrations; GST exemption is supply-specific.
• Statutory basis: Section 462 of the Companies Act, 2013 (compliance reliefs) · Sections 12AB and 80G of the Income Tax Act, 1961 (tax) · GST Notification No. 12/2017 (GST) · State stamp acts (stamp duty).
• Provisional 12AB registration is valid for 3 years, regular registration for 5 years (or 10 years for small trusts with income under ₹5 crore under the Finance Act, 2025).
• Minimum 85% of income must be applied toward charitable objects every financial year to retain the Section 11 / 12AB exemption.
• Penalty for default: ₹100 per day per form for delayed ROC filings; cancellation of 12AB and 80G registrations; revocation of Section 8 licence under Section 8(6).

What Makes Section 8 Companies Eligible for Exemptions?

The Central Government grants these exemptions to Section 8 Companies under Section 462 of the Companies Act, 2013, in the public interest. These exemptions apply only to companies with a valid Section 8 license. Incorporation alone without the Section 8 license does not confer these exemptions.  

A Section 8 licence is granted by the Registrar of Companies (ROC) under Section 8(1) only when the company satisfies the following conditions: 

• It promotes objects such as commerce, art, science, sports, education, research, social welfare, religion, charity, or environmental protection.
• It applies its profits and income exclusively toward advancing those objects.
• It prohibits the payment of any dividend to its members.

These exemptions continue only while the company acts in the public interest and follows its charitable objectives. Under Section 8(6), the Central Government can revoke the license if the company violates its license conditions, engages in fraudulent conduct, or acts against public interest. Once revoked, the company loses all Section 8 exemptions and becomes subject to regular Companies Act compliance requirements.

Exemptions to Section 8 Companies Under the Companies Act 2013

The MCA issued two notifications in 2015 and 2017 granting compliance exemptions to Section 8 companies. Companies that fail to file financial statements or annual returns cannot claim them.

The table below lists the compliance exemptions available under the Companies Act, 2013, along with their practical meaning:

Section	Subject	Exemption / Modification for Section 8 Companies
Section 2(24)	Company Secretary	The appointee does not need to be an ICSI member in a Section 8 company.
Section 2(68) & 2(71)	Minimum paid-up share capital	No minimum paid-up capital is required, and Section 8 companies limited by guarantee do not have share capital at all.
Section 96(2)	Annual General Meeting (AGM)	The Board sets the AGM’s time, date, and place as directed by members in a previous general meeting.
Section 101(1)	Notice period for general meetings	Only 14 clear days’ notice is required instead of 21 days.
Section 118	Minutes of meetings	Section 118 doesn’t apply, except where the AoA requires confirmation by circulation, in which case minutes must be recorded within 30 days.
Section 136(1)	Sending financial statements to members	Financial statements must reach members at least 14 days before the AGM, instead of 21 days.
Section 149(1)(b) & first provison	Maximum number of directors	More than 15 directors can be appointed without passing a special resolution.
Section 149(4) to (13)	Independent directors	All provisions relating to independent directors do not apply.
Section 150	Databank of independent directors	Independent director selection from the government database does not apply.
Section 152(5) proviso	Consent of the Director to the Registrar	The proviso requiring a director to file consent with the Registrar does not apply.
Section 160	Right to stand for directorship	Does not apply to companies whose AoA provides for the election of directors by ballot.
Section 165	Limit on the number of directorships	Directorships in Section 8 companies do not count toward the ceiling of 20 directorships.
Section 173(1)	Frequency of board meetings	At least one board meeting must be held every six calendar months instead of four meetings each year.
Section 174(1)	Quorum for board meetings	The quorum is 8 members or 25% of the total strength of the board, whichever is less, subject to a minimum of two members present (instead of the standard one-third or two directors, whichever is higher).
Section 177(2)	Audit Committee composition	The Audit Committee, where applicable to a Section 8 company, must have a minimum of three directors, but the requirement that a majority be independent directors does not apply. Since Section 8 companies are exempted from Section 149(4)-(13) on independent directors entirely, the audit committee can be constituted with executive directors.
Section 178	Nomination & Remuneration Committee and Stakeholders Relationship Committee	Neither committee is required to be constituted.
Section 179(3)	Powers of the Board	Borrowing, investing, loans, and guarantees can be approved by a circulated board resolution.
Section 184(2) & Section 189	Disclosure of interest and register of contracts	Disclosures and registers apply only to Section 188 transactions above ₹1 lakh.

Applies to both private and public Section 8 companies, but compliance continues; accounts, standards, and ROC filings are required.

Do Exemptions Differ for Public vs Private Section 8 Companies?

All MCA-notified compliance exemptions apply equally to private and public Section 8 companies. However, the underlying base obligations differ before the exemption is applied:

• Private Section 8 Company — minimum of 2 directors and 2 members; lower compliance threshold.
• Public Section 8 Company — minimum of 3 directors and 7 members; default Companies Act compliance is stricter, so the exemption provides proportionally greater relief.

Most non-profits in India incorporate as private Section 8 companies because of the lower base compliance burden. Public Section 8 companies are typically chosen by larger institutional non-profits (such as research foundations or large-scale CSR vehicles) that benefit from public-company governance signalling.

Section 8 Company Income Tax Exemption: 12AB Registration and 80G Benefits 

Registering a Section 8 company under the Companies Act, 2013, does not automatically grant tax exemption. The company must separately register under the Income Tax Act, 1961, for exemptions under Sections 12AB and 80G.

1. Section 12AB: Income Tax Exemption on Income

The Finance Act, 2020, replaced Section 12AA with Section 12AB from April 1, 2021. After obtaining Section 12AB registration, a Section 8 company can claim income tax exemption on its income under Section 11, subject to the following conditions:

Condition	Requirement
Minimum application of income	At least 85% of the total income must be applied toward charitable objects during the financial year.
Accumulation of income	If 85% cannot be applied in a given year, the company must file Form 10 with the Assessing Officer to accumulate the balance for up to five years.
ITR filing	The company must maintain proper books of account and file Form ITR-7 annually.

A Section 8 company that fails to meet these conditions loses the tax exemption on the unapplied portion, which becomes taxable at applicable rates.

2. Section 12AB Registration Lifecycle and Validity

A Section 8 company must file Form 10A on the Income Tax Department’s e-filing portal to apply for 12AB registration. Additionally, the Finance Act, 2025, has updated the validity framework as follows:

Stage	Validity	Eligibility	Form to File	Timing
Step 1 — Provisional Registration	3 years	New Section 8 companies that have not yet commenced charitable activities	Form 10A	Within 1 month from incorporation or before activities commence
Step 2 — First Regular Registration	5 years	All Section 8 companies, after the 3-year provisional period	Form 10AB	At least 6 months before provisional registration expires (i.e., within 6 months of commencing activities, whichever is earlier)
Step 3 — Renewal of Regular Registration	5 years	Standard Section 8 companies with annual income above ₹5 crore	Form 10AB	At least 6 months before each 5-year cycle expires
Optional — Extended Validity (Small Entities)	10 years	Section 8 companies whose total income did not exceed ₹5 crore in each of the two financial years preceding the application (effective Finance Act, 2025)	Form 10AB	At renewal — replaces the 5-year cycle for eligible small entities

3. Section 80G Registration: Tax Benefits for Donors of Section 8 Companies

Section 80G of the Income Tax Act, 1961 allows individuals and corporations who donate to a registered Section 8 company to claim a 50% deduction on the donated amount from their taxable income, subject to a qualifying limit of 10% of the donor’s adjusted gross total income. It does not benefit the Section 8 company directly; it incentivises donors.

A Section 8 company can apply for 80G registration only after obtaining 12AB registration. Both applications can be filed together using Form 10A on the Income Tax e-filing portal.

Note on legacy registrations: Trusts and Section 8 companies previously registered under Section 12AA (the predecessor to 12AB, replaced by the Finance Act, 2020) had to migrate to 12AB by filing Form 10A within the prescribed transition window. Existing 80G registrations also had to be re-applied for under the new framework. Today, all valid registrations are under the 12AB regime, not 12AA.

Particulars	Details
Deduction available to the donor	50% of the donated amount
Qualifying limit	Maximum 10% of the donor’s adjusted gross total income
Mode of donation	Donations exceeding Rs. 2,000 must be made through cheque, demand draft, or digital payment
Who benefits	Donors, individuals, and corporations contributing to the Section 8 company

For example, if a donor contributes Rs. 1 lakh to a Section 8 company with 80G registration, they can claim a deduction of Rs. 50,000 from their taxable income. This deduction is subject to the 10% qualifying limit on their adjusted gross total income.

Section 12AB and 80G registrations form the core tax relief framework for Section 8 companies in India. Section 12AB exempts the company’s own income from tax, while 80G incentivizes donors by allowing them to claim deductions on their contributions. 

GST Exemptions for Section 8 Companies in India

Income tax exemption under Section 12AB and GST exemption are two separate things. A Section 8 company with 12AB registration does not automatically get GST exemption. GST liability depends on the nature of the supply, not the organization’s charitable purpose. 

Under Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, a Section 12AB-registered entity can claim GST exemption on charitable services. However, both prescribed conditions must be met together:

• The Section 8 company must hold a valid registration under Section 12AB of the Income Tax Act, 1961.
• The services provided must fall within the definition of “charitable activities” as specified in the notification.

What Qualifies as Charitable Activities Under GST?

• Activities relating to public health, such as care or counselling of ill persons, health awareness, and family planning.
• Educational programmes or skill development for orphaned children, disabled persons, prisoners, and senior citizens in rural areas.
• Activities relating to the advancement of religion, spirituality, or yoga.
• Coaching or training in recreational activities such as arts, culture, sports, dance, music, drama, or literary activities.
• Activities relating to the preservation and protection of the environment.
• Relief to the poor, including food, clothing, or medicines.

Which Section 8 Company Does Not Qualify for GST Exemption?

• Sale or supply of goods, since GST exemption generally applies only to eligible charitable services. 
• Commercial or fee-based services outside the approved charitable scope.
• Donations linked to a supply of goods or services where a consideration element exists.

Note: Donations received are not subject to GST because donations do not constitute “consideration” for any taxable supply under the GST Act.

GST Registration Threshold

A Section 8 company must register for GST when any of these conditions apply:

• Service turnover exceeds ₹20 lakh in a financial year (₹10 lakh in special category states — Manipur, Mizoram, Nagaland, Tripura, etc.).
• Supply of goods exceeds ₹40 lakh in a financial year — applicable only if the company deals exclusively in goods, not services (₹20 lakh in special category states).
• The company makes inter-state supply of goods or services (mandatory registration from the first rupee, with limited exceptions for services under the special threshold).
• The company sells through e-commerce operators, subject to TCS under GST.
• The company is liable to pay GST under the reverse charge mechanism (e.g., on legal services, sponsorship, or import of services).

For mixed-supply Section 8 companies (offering both goods and services), the ₹20 lakh services threshold applies because supplying any taxable service brings the entity into the lower threshold by default.

A Section 8 company involved in both exempt and taxable activities must separately maintain them and file GST returns for its taxable activities.

Stamp Duty Exemption for Section 8 Companies

State-specific stamp laws govern the stamp duty applicable to the MOA, AOA, and authorized capital of a Section 8 company. Since stamp duty is a state subject, rates and exemptions vary across states, and no nationwide exemption applies to Section 8 companies.

Most states offer nil or reduced stamp duty for Section 8 companies in recognition of their non-profit nature. In addition, the MCA charges no incorporation filing fee through SPICe+ for Section 8 companies with an authorized capital of up to Rs. 15 lakh. This makes Section 8 company registration significantly more cost-effective than incorporating a private or public limited company with the same authorized capital. 

What does the Stamp Duty Relief Cover?

• Stamp duty on the MOA at the time of incorporation.
• Stamp duty on the AOA at the time of incorporation.
• Stamp duty on any increase in authorized share capital.

What Does Stamp Duty Relief Not Cover?

• No state provides an exemption from stamp duty on share certificates issued by a Section 8 company.
• The relief applies only to the instruments listed above, not to all documents the company executes.

Note: Since rates change periodically, ensure to verify the current applicable rate in its state before filing Section 8 incorporation documents.

How to Retain Section 8 Company Exemptions: Compliance Conditions

The exemptions available to a Section 8 company remain valid only if the company continues to meet its obligations under the Companies Act, 2013, and the Income Tax Act, 1961. A Section 8 company that defaults risks losing its exemptions, facing financial penalties, and having its license revoked.

Conditions to Retain Section 8 Company Exemptions

To retain its exemptions, a Section 8 company must comply with the following legal and tax requirements: 

• The company must file its financial statements under Section 137 and its annual return under Section 92 on time.
• The company must apply all income and profits only toward its stated charitable objects and must not distribute any dividends or profits to its members.
• The company must apply at least 85% of its total income toward charitable purposes each financial year.
• The company must renew its 12AB registration through Form 10AB before expiry and separately renew its 80G registration every five years.

Annual Filing Requirements for Section 8 Companies

Section 8 companies must complete the following annual filings to maintain legal and tax compliance: 

Form	Purpose	Deadline
AOC-4	Audited financial statements	Within 30 days of the AGM
MGT-7	Full annual return, directors, members, compliance details	Within 60 days of the AGM
ITR-7	Income tax return for entities claiming exemption under Section 11	As per the Income Tax Act, the deadline
Form 10B	Audit report for Section 12AB-registered Section 8 companies, filed by a Chartered Accountant	By 30th September of the assessment year
Form 10BD	Statement of donations received where donors claim an 80G deduction	As prescribed
Form 10BE	Donation certificate issued to eligible donors after filing Form 10BD	As prescribed
ADT-1	Intimation of auditor appointment	Within 15 days of the appointment

Consequences of Non-Compliance for Section 8 Companies

• Loss of Companies Act exemptions for defaulting on Section 92 or Section 137 filings.
• Cancellation of 12AB and 80G registrations for non-compliance with Income Tax Act requirements. 
• Revocation of the Section 8 license under Section 8(6), converting the company into an ordinary limited company.
• Penalty of Rs. 100 per day per form for delayed ROC filings.

Maintaining compliance is not merely a legal obligation; it is the condition on which every exemption, tax benefit, and the organization’s non-profit status rests.

Looking to register a Section 8 company or need help with 12AB, 80G, or annual compliance? RegisterKaro’s experts handle everything, from incorporation to filings, so your organization stays focused on what matters most. Contact us today for end-to-end Section 8 company compliance assistance!

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