Section 8 Companies are considered to be non-profit organizations because their primary objective is to serve society and promote social welfare. Unlike other companies, Section 8 Companies are not established to generate profits for their shareholders or members. Instead, they reinvest any surplus generated in their activities or towards their social welfare objectives. This is why they are also referred to as “not-for-profit” companies.

Section 8 Companies can be incorporated with or without share capital, and can have a minimum of two members and two directors. These companies must also register with the Registrar of Companies (RoC) and obtain a license from the Central Government. They are also required to comply with certain rules and regulations prescribed by the Companies Act, 2013.

In addition to tax benefits and reduced compliance requirements, Section 8 Companies also enjoy certain privileges, such as exemption from stamp duty, reduced registration fees, and a faster registration process. These factors make them a popular choice for individuals and organizations looking to engage in philanthropic activities or to promote social welfare causes.