Section 8 Company After Incorporation: Compliance Checklist

Last reviewed: 25 September 2026. A Section 8 company is a full company with a charitable licence — which means it inherits every Companies Act clock a private limited company faces, and then adds a second layer: tax-exemption registrations, donor-side approvals and foreign-funding rules. Miss the second layer and the sting is real: donations become taxable income at company rates, CSR money cannot be accepted, and one foreign-source receipt without FCRA cover creates a contravention. Here is the complete after-incorporation checklist.

Companies Act obligations — with Section 8 relaxations

The generic first-year mechanics — registers, DIR-3 KYC, DPT-3, MSME-1 — are the same as any company; see our first-year compliance checklist alongside this guide.

Bank account — open it right

• Open the current account immediately after the first board resolution (COI, MOA/AOA and the Section 8 licence are the usual KYC set); route subscription money through it before INC-20A, where applicable.
• Keep one general account for domestic donations and programme spending — and never mix restricted grants with general funds; grant agreements usually demand traceability.
• The FCRA account is separate and comes later: it can only be the designated account at SBI New Delhi Main Branch, opened once FCRA registration or prior permission is in hand — never receive foreign money in the general account. Our FCRA compliance guide covers the account structure.

12A and 80G — the tax spine (apply before you fundraise)

Without registration under Section 12A/12AB, the company's surplus — including donations — is taxed at normal company rates. With it, income applied to charitable objects is exempt, subject to the application and accumulation rules, annual ITR-7 and the audit report in Form 10B/10BB. 80G approval is the donor-side twin: it lets Indian donors claim a deduction and is now table stakes for serious fundraising. Both start as provisional registrations for a new entity and mature into regular ones. The full process, validity periods and renewal traps are in our detailed guide to 12A and 80G registration.

• CSR-1: to receive CSR money from companies, file Form CSR-1 with MCA (needs 12A + 80G) — corporates will ask for the CSR-1 number before releasing a rupee.
• NGO Darpan ID: register on the NITI Aayog Darpan portal — a prerequisite for FCRA applications and most central/state grant schemes.

GST — required or not?

Practical position: most donation-funded Section 8 companies do not need GST registration on day one — but the moment a fee-earning programme, sponsorship package or product line starts, run the threshold and trigger check. Our GST services desk can map your receipts once.

Professional tax (PT), PTEC and PTRC — explained properly

Professional tax is a state tax on professions and employment (Article 276 of the Constitution; capped at Rs 2,500 a year). Around 18 states levy it — Maharashtra, Karnataka, West Bengal, Gujarat, Madhya Pradesh, Telangana, Andhra Pradesh and Tamil Nadu among them — while Delhi, Uttar Pradesh, Haryana, Punjab, Rajasthan and Uttarakhand levy none. A Maharashtra Section 8 company therefore has PT obligations in Maharashtra, and in any other PT-levying state where its people sit; an employee working from Delhi carries none.

• PTEC within 30 days of incorporation — the company as an entity pays Rs 2,500 per year (by 30 June annually); being charitable does not by itself exempt it. Directors may need individual PTEC where applicable.
• PTRC before the first salary run — Maharashtra slabs: NIL up to Rs 7,500 (men), Rs 175 for Rs 7,501-10,000, Rs 200 above that (Rs 300 in February); women earning up to Rs 25,000 suffer NIL deduction — a threshold payroll teams often miss.
• Exemptions: senior citizens above 65 and persons with 40%+ disability, among others.
• Shops & Establishments (Maharashtra 2017 Act): registration within 60 days where 10 or more persons are employed; an intimation route below that. Banks and payment gateways routinely ask for it.
• PF/ESIC on crossing 20 / 10 employees respectively — NGOs are not exempt. These obligations now arise under the Code on Social Security, 2020, in force with the other labour codes from 21 November 2025, in place of the EPF and ESI Acts.

State-wise rates, the full Maharashtra slab table and multi-state remote-team rules: our detailed professional tax guide.

Udyam, FSSAI and sector licences

• Udyam (MSME): available where the company carries on a manufacturing or service activity — common for social enterprises running training centres, production units or paid service delivery. It is free and brings payment protection under section 37(2)(g) of the Income-tax Act, 2025 (old 43B(h)) when you invoice businesses. A purely grant-making body with no economic activity does not fit the enterprise definition.
• FSSAI: any handling, preparation or distribution of food — including free community kitchens and surplus-food distribution — needs FSSAI cover. From 1 April 2026, basic registration covers turnover up to Rs 1.5 crore, a state licence applies above Rs 1.5 crore up to Rs 50 crore, and a central licence above Rs 50 crore. Surplus-food distributors are also covered by the 2019 surplus-food regulations. See our FSSAI compliance checklist.
• Sector-specific: schools, hospitals, old-age homes and shelters carry their own state registrations — map these before operations start, not after.

Can an NRI invest in a Section 8 company?

First, reset the word "invest": a Section 8 company pays no dividends and on winding-up its assets pass to another entity with similar objects — so any money in, whether donation or share subscription, is philanthropic support, not a return-bearing investment. With that frame, the funding matrix:

A new Section 8 company normally cannot get FCRA registration straight away — it needs a three-year track record with Rs 15 lakh spent on its objects; the prior-permission route (donor-specific, amount-specific) is the early-stage alternative. The eligibility detail is in our FCRA registration guide.

Official sources: FCRA Online portal (MHA) · MHA FAQs on FCRA (PDF)

The NRI exemption under FCRA — precisely

The exemption our matrix relies on comes straight from the statute and MHA’s own FAQs: "foreign source" under Section 2(1)(j) of FCRA covers foreign citizens — and an NRI who retains Indian citizenship is not one. MHA’s FAQ states that a contribution by an Indian citizen living abroad, from personal savings, through normal banking channels, is not foreign contribution. Four conditions keep you inside that exemption:

• Citizenship, evidenced: obtain and file a copy of the donor’s valid Indian passport with each remittance — the moment citizenship changes (OCI or foreign passport), the same person becomes a foreign source.
• Personal funds: the money should come from the donor’s own savings — not routed from a foreign employer, foreign entity or third party through them.
• Normal banking channel: NRE/NRO or foreign-account transfer with a clear trail; never cash or informal channels.
• Documentation SOP: a short donor declaration (citizenship and source of funds), the passport copy, and a board minute noting the check — this file is what protects you in an FCRA inquiry years later.

Caution: joint accounts where one holder is an OCI or foreign citizen, and remittances funded by a foreign employer, sit in the grey zone — treat them as foreign source unless proven otherwise. When in doubt, route through the FCRA account or decline until FCRA cover exists.

If your donor base includes NRIs, our CA for NRIs team can set up the donor-side documentation, and our NGO, Section 8 and FCRA compliance service covers the FCRA application and the SBI account for foreign-citizen donors.

First-90-days sequence we recommend

1. Board meeting, auditor + ADT-1, bank account, PTEC — week 1 to 4.
2. Apply for provisional 12A and 80G (Form 104 under sections 332 and 354 for applications from 1 April 2026) immediately — before the first fundraising push.
3. Darpan ID, then CSR-1 once 12A/80G are in hand.
4. INC-20A (if share capital) once subscription money is banked.
5. Map GST triggers, Shop Act, FSSAI and sector licences to your actual programmes.
6. Write the donor-KYC SOP now — citizenship proof for every remittance from abroad, so an OCI cheque never lands in the general account.

Frequently asked questions

This article is general information as of 25 September 2026, not professional advice. FCRA positions — especially on foreign share capital — involve unsettled areas where a conservative, documented approach is advisable; verify the current law and your facts before acting. Consult a Chartered Accountant for your specific situation.