Section 8 Company Tax Exemption: 12A and 80G Next Steps After Incorporation

Last updated 26 September 2026

Does a Section 8 company get tax exemption automatically?

No. A Section 8 company gets a licence and a non-profit structure at incorporation, but income-tax exemption needs a separate registration (commonly called 12A) and donor deductions need another (80G). Both are applied for after the company exists.

Say Kavita registers a Section 8 company for a rural health camp programme and receives ₹5 lakh in donations in its first year. Her donors ask for an 80G receipt. She realises the company has no 80G registration yet, and that without 12A the surplus of the company may be taxed like any other company's income. The Certificate of Incorporation did not carry either one. She has to apply, and until approval comes, her donors cannot claim the deduction.

This guide explains why the two steps are separate, what each one does, the sensible order, and how to prepare so your application is not delayed. It stays general on section numbers and processing times, because the Income-tax Act, 2025 came into force on 1 April 2026 and renumbered sections and forms. Your CA works from the current provisions. If you have not incorporated yet, see the Section 8 cost guide.

What do 12A and 80G each do for a Section 8 company?

12A registration lets the organisation itself claim exemption on income applied to its charitable objects, while 80G registration lets the people who donate to it claim a deduction on their own tax. They serve different parties and are applied for separately, though usually together.

Think of 12A as the organisation's shield and 80G as the donor's incentive. A donor giving to an organisation with 12A but no 80G still helps the mission, but gets no deduction, which is often what decides whether an individual or company donor gives more. A funder who wants to claim a deduction will usually check both before transferring money, so most non-profits treat the two as one project.

Terms and the tax section numbers under the Income-tax Act, 2025 differ from older blogs, and new form names have replaced the old ones for later years. For the distinction and eligibility in detail, read the 12A and 80G difference guide.

In what order should you do things after incorporation?

The practical order is: incorporate, get PAN and a bank account in the company's name, set up books, apply for 12A and 80G, then apply for FCRA if you plan to take foreign money. Each step depends on the one before it.

1. Receive the Certificate of Incorporation and licence. These are issued together for a company under Section 8.
2. Get PAN, TAN if needed, and a bank account. Donations must flow through the company's own account, not a founder's.
3. Set up accrual-basis books. a company under Section 8 must keep accrual, double-entry accounts; the tax application will ask for financial details.
4. Apply for 12A and 80G. Your CA prepares the application with your objects, documents and any activity record. See the process guide for the steps.
5. Plan foreign funding. If you want foreign contributions, look at FCRA registration or prior permission; it is a separate process from tax exemption.

Many founders wait until they have donors before applying. It is usually better to apply early, because donors cannot rely on 80G until approval, and processing can take time; ask your CA how donations received before approval are treated. We do not quote a duration here because sources conflict; your CA gives you a current view.

What should you prepare before applying for 12A and 80G?

Have your incorporation documents, your MOA and AOA with the objects clause, a list of your activities and beneficiaries, financial statements where they exist, and the names and PANs of directors. The stronger the paper record of charitable activity, the smoother the application.

• Constitutional documents: certificate, licence, MOA and AOA.
• Financial position: bank statements, books and, if the company has completed a year, audited accounts.
• Activity record: what you have done, for whom, with what money, so the objects clause is shown to be genuine.
• Director details: PAN and identity documents of each director.

An objects clause that is vague or allows profit-sharing causes trouble at incorporation and again here. Keep the MOA specific and keep the income application clean. The 12A and 80G cost guide lists what a filing typically involves, and the 12A and 80G registration page shows how to start.

What happens if a Section 8 company does not register for 12A and 80G?

If you do not register, the company's surplus is generally taxed like an ordinary company's, and donors cannot claim the 80G deduction. You also lose the credibility signal that many CSR teams and grant-makers look for when reviewing a non-profit.

The company still has to keep its regular MCA compliance, including audit, AOC-4 and MGT-7 each year, whether or not the tax registration is done. See the annual compliance guide. Registration also brings its own yearly duties: reporting, application of income and returns that are covered in the 12A and 80G compliance guides.

One more tie to CSR: a company under Section 8 that wants to act as a CSR implementing agency needs CSR-1 registration with the MCA, and the rules also look at track record when it is not linked to the funder. That is separate from 12A and 80G, so ask your CA which registrations your funders will actually ask for.

Should you choose a Section 8 company only for the tax benefit?

No. The tax exemption does not come from the structure, and a trust or a society can also apply for 12A and 80G. Choose a Section 8 company for governance, limited liability and how funders read it, not because you expect exemption to come with it.

If your work is small and local and you cannot budget for yearly audit and filings, a trust or society may serve you better; compare them in our Section 8 vs trust vs society guide. If you want to distribute profits, a Section 8 company is the wrong tool altogether; look at a Private Limited company.

Does Shunya's Section 8 registration include 12A and 80G?

No. Shunya's Section 8 service covers the incorporation itself: MOA and AOA, the licence application, and the SPICe+ filing, reviewed by a practising Chartered Accountant. 12A and 80G are distinct follow-on filings; ask your CA on the free callback how to proceed after you have your certificate.

Shunya's professional fee for the incorporation is ₹1,999. It excludes the DSC issuer's charge, government fees, stamp duty and other third-party costs, which are billed separately and explained by your CA on the callback. You can request the callback, or pay the fee online, from the Section 8 registration page, or WhatsApp +91 80809 18797.

This article is for general information only. For your specific situation, consult a practicing CA.