What is the penalty for Section 8 company registration?

While registering a Section 8 company in India itself does not attract any penalty, non-compliance after registration can lead to serious consequences. Section 8 companies are formed for charitable, social, educational, or not-for-profit objectives under the Companies Act, 2013. To retain their privileges—such as tax exemptions, the right to receive donations, and limited liability—they must adhere to strict compliance norms.
If a Section 8 company fails to comply with conditions laid down under the Act or misuses its license (for example, distributing profits or diverting funds), the license can be revoked by the Registrar of Companies. Upon revocation, the company could be converted into a regular company or even ordered to wind up.
As per Section 8(11) of the Companies Act, any person who is knowingly a part of such default may face:
•A fine not less than ₹10 lakh, which may extend up to ₹1 crore
•Imprisonment for up to 3 years
•Or both fine and imprisonment
Hence, while registration is straightforward, maintaining compliance post-registration is critical to avoid hefty penalties and legal action. Always ensure timely filings, proper record-keeping, and adherence to the company’s not-for-profit objectives.