What is the difference between a Private Limited Company and a Section 8 Company ?

The difference between a Pvt Ltd and a Section 8 Company (1)

Private Limited Company and Section 8 Company are two different types of companies that are formed with different objectives. Both of the companies are non-government companies and require minimum 2 shareholders and 2 directors to incorporate them but the Section 8 Company is incorporated for charitable purposes whereas Private Limited Company is formed for profit maximization.


What is Private Limited Company?

A private limited company is a type of business structure that is held privately by at least 2 shareholders and it is incorporated for commercial and profit-making purposes.

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What is Section 8 Company?

In India, Non-Profit organizations can register themselves either under the Trust Act, 1882 or the Societies Registration Act, 1860 or can be registered as company under the Section 8 of the Companies Act, 2013 (previously under Section 25 of the Companies Act, 1956). When any company is registered under the Section 8 of the Companies Act, 2013 as a non-profit entity with the aim of charity or non-profit purposes then it is known as Section 8 Company.

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Key differences between Private Limited Company and Section 8 company





Profit-Making Company

Non-Profit Company


Section 2(68) of the Companies Act, 2013

Section 8 of the Companies Act, 2013


Profit Maximization

To encourage art, science, commerce, charity, education, religion, protection of the environment, social welfare, sports, research or any other advantageous object such as for any charitable or not-for-profit purposes

Minimum Authorized Share capital

Rs. 1 Lakh

No limit is prescribed

Company’s Name

Must have suffix either “Limited” or “Private Limited”

Must end with the words prescribed for such companies like “Foundation, Forum, Federation, Association etc.”



Yes, It can be converted into Section 8 Company

Yes it can be converted into Private Limited Company



Voluntary Winding-up


Yes, can be easily be wound up by voluntarily by filing STK-2 Form with the ROC

It can be closed only by surrendering its license to operate as a non-profit company and such license can be surrendered only by converting its structure into Private Limited Company. Thereafter, the company can follow the winding-up process of Private Limited.

Stamp Duty

Mandatory to pay stamp duty as applicable on Company’s incorporation


Not applicable


Tax Exemptions (on non-profit organization only)


Not Applicable

Various Tax exemptions are provided to Section 8 Company and/or to the donors who are contributing to such companies


Consequently, the structure of both of the companies are quite similar but are absolutely different from each other in terms of their main objective and functioning as the Section 8 company is formed for charitable purposes while Private Limited company is formed for profit-making purpose.

In case of any further query, Contact Your Trustworthy Advisors Manthan Experts for incorporating your Company.

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Knowledge Source:

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