12 December 2014
what is the difference between benefit of registration u/s 8 of company act 2013 and registration u/s 12a of it act 1961 for 80g benefit? please reply.
23 July 2025
### **Clarification on the Difference Between Registration under Section 8 of the Companies Act, 2013 and Registration under Section 12A of the Income Tax Act, 1961 (for 80G Benefits)**
The question revolves around the **benefits** of two types of **registrations**:
1. **Registration under Section 8 of the Companies Act, 2013** (for a company that is formed for promoting charity, social welfare, etc.). 2. **Registration under Section 12A of the Income Tax Act, 1961** (for claiming tax exemptions and benefits under 80G).
Let’s break down both types of registration and their differences:
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### **1. Registration under Section 8 of the Companies Act, 2013**
**Section 8** of the **Companies Act, 2013** pertains to the registration of **non-profit organizations** (NPOs) that are set up for the promotion of **charitable, religious, educational**, or **social welfare activities**. Such companies can be formed as **private limited companies** or **public limited companies**, but they have a few specific characteristics:
#### Key Features of Section 8 Registration:
* **Non-Profit Objective**: The company must be formed with a **non-profit** objective, which means that its income and profits cannot be distributed to its members. Instead, the profits must be used only for promoting the objectives of the company. * **Approval from Central Government**: To register under Section 8, the company must obtain **approval from the Ministry of Corporate Affairs (MCA)**. The application is made to the **Registrar of Companies (ROC)**. * **Governance**: It has to comply with certain rules and regulations that limit the transfer of assets and profits to its members and ensure that the activities are carried out for the benefit of society.
#### Benefits:
* **Exemption from Stamp Duty**: Section 8 companies are exempt from paying stamp duty on certain documents, like share certificates. * **License for Non-Profit Activities**: The main benefit is that they get a **license** to conduct charitable or social welfare activities under the **Companies Act**, giving them a legal framework to operate as a non-profit. * **Corporate Identity**: Being registered under the Companies Act, a Section 8 company has more **credibility** and **trust** among stakeholders as compared to other non-profits.
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### **2. Registration under Section 12A of the Income Tax Act, 1961**
**Section 12A** of the **Income Tax Act, 1961** deals with the registration of **charitable trusts** or **non-profit organizations** (including Section 8 companies) to be eligible for **tax exemptions**. This registration is **mandatory** for organizations that want to avail of benefits like **exemption from income tax**.
#### Key Features of Section 12A Registration:
* **Tax Exemption**: Organizations that are registered under **Section 12A** of the Income Tax Act are **exempt from paying income tax** on income received for charitable or religious purposes. * **Eligibility for 80G**: Registration under Section 12A is a prerequisite for an organization to apply for **80G certification**, which provides the benefit of tax deductions to donors who contribute to the charity. * **Annual Filing Requirement**: Section 12A organizations must comply with the requirement to file their income tax returns and ensure that they are carrying out genuine charitable activities.
#### Benefits:
* **Exemption from Tax**: Once registered under **Section 12A**, the organization is exempt from paying income tax on its income related to charitable activities. * **Eligibility for 80G**: Registration under **Section 12A** is a pre-condition for claiming **80G** benefits. Once an organization is registered under Section 12A, it can apply for **80G** certification, which allows donors to claim **tax deductions** under **Section 80G** for contributions made to the organization. * **No Tax on Donations**: Donations received by a Section 12A registered charity are **not taxed**.
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### **Difference Between Registration Under Section 8 and Section 12A**
| **Aspect** | **Section 8 of Companies Act, 2013** | **Section 12A of Income Tax Act, 1961** | | -------------------------------- | ------------------------------------------------------------------------------------ | --------------------------------------------------------------------------- | | **Purpose** | For forming a **non-profit company** (charitable, social welfare, educational, etc.) | For **tax exemptions** of charitable organizations | | **Governing Authority** | Ministry of Corporate Affairs (MCA) and ROC | **Income Tax Department** | | **Main Benefit** | Legal framework for non-profit activities | **Tax exemptions** for the organization and its donors (via 80G) | | **Requirement for Tax Benefits** | Does not automatically provide tax exemptions | **Mandatory** for claiming tax exemptions and for 80G | | **Eligibility for 80G Benefits** | Not automatically eligible for 80G. Must apply separately | Eligibility to apply for **80G** benefits (for tax deductions on donations) | | **Compliance** | Must comply with Companies Act requirements | Must file annual returns and follow IT Act compliance | | **Donor Benefits** | No automatic benefit for donors | Donors can claim **tax deductions** for contributions (under 80G) | | **Filing with Tax Authorities** | No direct tax exemption benefits under the Income Tax Act | Exemption from income tax and eligibility for 80G |
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### **Which Registration is Needed for 80G Benefit?**
For an organization to claim the **80G benefit** for its donors (i.e., to allow its donors to claim tax deductions), it must first be **registered under Section 12A** of the Income Tax Act, 1961.
While **Section 8 registration** gives the organization a legal structure and allows it to operate as a non-profit under the Companies Act, the **Section 12A registration** with the Income Tax Department is required for **tax exemption** purposes and to provide **80G benefits** to its donors.
In simpler terms:
* **Section 8 registration** gives the organization the **status of a non-profit company**. * **Section 12A registration** ensures the **tax-exempt status** of the organization and makes it eligible for **80G** (which provides tax deductions to donors).
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### **Conclusion:**
* **Section 8 registration** is for forming a **non-profit company** under the Companies Act. * **Section 12A registration** is for **tax exemptions** under the Income Tax Act, and is a **mandatory requirement** for **80G eligibility** (i.e., for allowing donors to claim tax deductions).
If your main goal is to offer **80G benefits** to your donors, then **both registrations are needed**—**Section 8** for forming the company and **Section 12A** for tax benefits under the Income Tax Act.
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