In India, forming a non-profit organization is a powerful way to drive social change. Whether you are working in the field of education, health, environment, or human rights, establishing a legally recognized structure is essential. Two of the most common forms of non-profit entities in India are the Section 8 Company and the Society. While both serve charitable purposes, they are governed by different laws, follow distinct procedures, and offer different advantages.
In this article, we’ll clearly explain the difference between a Section 8 Company and Society, along with a detailed comparison on various legal, administrative, and operational aspects. This guide will help you choose the best structure for your NGO or non-profit organization.
What is a Section 8 Company?
A Section 8 Company is a non-profit organization registered under Section 8 of the Companies Act, 2013. It is established with the sole purpose of promoting charitable objectives like education, art, science, social welfare, and environmental protection. Unlike other companies, a Section 8 Company cannot distribute profits or dividends to its members. All income and assets must be utilized for promoting its objectives.
Key highlights of a Section 8 Company:
Registered under the Ministry of Corporate Affairs (MCA)
Operates with limited liability
Can receive donations and grants, including foreign contributions (with FCRA)
Highly credible and preferred by government and CSR funders
What is Society Registration?
A society is a group of individuals who come together voluntarily for a common charitable purpose. Society registration is done under the Societies Registration Act, 1860, at the state level. Societies are more suitable for smaller and region-specific NGOs with a broader member base.
Key features of society registration:
Registered with the Registrar of Societies at the state level
Requires at least 7 members for state-level and 8 members from different states for national-level registration
Governed by a set of Rules and Memorandum of Association (MOA)
Less strict compliance compared to a Section 8 Company
Key Differences Between Section 8 Company and Society Registration
Let’s break down the differences between these two structures on multiple parameters:
| Aspect | Section 8 Company | Society Registration |
|---|---|---|
| Governing Law | Companies Act, 2013 | Societies Registration Act, 1860 |
| Registration Authority | Ministry of Corporate Affairs (MCA) | Registrar of Societies (State Govt.) |
| Legal Status | Separate legal entity | Separate legal entity (in some cases) |
| Members Required | Minimum 2 Directors and 2 Shareholders | Minimum 7 members (state), 8 from different states (national) |
| Area of Operation | Can operate across India | Can be state or national depending on registration |
| Compliance & Regulation | High - Annual returns to ROC, auditing, etc. | Moderate - Annual filing of list of members |
| Credibility | High - Preferred by CSR & govt funding bodies | Medium - Less preferred than Section 8 Company |
| Tax Exemptions | Eligible for 12A & 80G | Eligible for 12A & 80G |
| Foreign Donations | Eligible with FCRA registration | Eligible with FCRA registration |
| Governing Document | MOA & AOA (Memorandum & Articles of Association) | MOA & Rules and Regulations |
| Profit Distribution | Not allowed | Not allowed |
| Stamp Duty | Lower or Nil | May vary by state |
Benefits of Registering a Section 8 Company
Opting for a section 8 company offers several advantages:
Greater credibility and recognition among donors, corporates, and government authorities
Limited liability protection to members and directors
Structured governance under the Companies Act
Eligibility to receive foreign contributions and large CSR grants
Mandatory audit and compliance ensure financial transparency
Because of its corporate structure, a section 8 company is more suited for large-scale social enterprises and NGOs planning to grow nationally or internationally.
Benefits of Society Registration
Although not as tightly regulated as Section 8 Companies, society registration offers some distinct advantages:
Simpler registration process, especially at the state level
Easier to start with a larger group of individuals (7 or more members)
Useful for community-based, educational, and cultural organizations
Lower cost of formation and easier to manage on a small scale
Societies are best suited for local NGOs or community-based groups that operate within a specific region or state.
Which One Should You Choose?
Your choice between a section 8 company and society registration depends on several factors:
Choose a Section 8 Company if:
You aim for national or international operations
You want a more structured and professional setup
You are looking for CSR or government funding
You want your NGO to maintain high compliance standards
Choose Society Registration if:
You are starting with a limited budget
Your team consists of 7 or more individuals
You are focusing on local community-based work
You want a simpler administrative structure
Each has its strengths, and your decision should align with your NGO's goals, scale, and operational needs.
Final Thoughts
Both section 8 company and society registration serve as effective vehicles for running a non-profit in India. While both structures promote charitable objectives and are eligible for similar tax benefits and foreign donations, the difference lies in their governance, credibility, and compliance levels.
If you are aiming to build a scalable, professionally managed NGO with high transparency, a section 8 company may be your best choice. On the other hand, if you’re starting a grassroots initiative with local partners, society registration can offer flexibility and ease.
Before choosing, carefully evaluate your long-term vision, team strength, and funding goals. Whichever structure you choose, ensure proper compliance, transparent operations, and a clear mission to make a lasting social impact.
