By promoting it as a not-for-profit organization, the Act prohibits distributing profit among members. This says that all the income or profit from any activity of the company must be utilized towards the charitable purpose for which it is registered.

Tax Privileges

Being non-profits organizations, the Section 8 companies have the perks of being exempted from paying the income tax. The companies also exercise several other tax benefits and also enjoy certain merits by virtue of Section 80G of the Income Tax Act, 1961. The donations made towards the Section 8 companies by individuals and corporations can claim tax exemptions as well.

Capacity to Own Property

Being a separate legal entity, a Section 8 company can own or alienate tangible or intangible property by itself. The property could be a residential property, non-residential property like a training center, research institute, schools, gallery etc. The property would belong to the company and no member or shareholder can claim the same.