In India, many non-profit organisations and social enterprises are now exploring ways to access government benefits, funding support, and formal recognition. One common question that arises is whether a Section 8 company can apply for MSME registration, also known as Udyam Registration. With evolving regulations and broader MSME definitions, this topic has become especially relevant in 2025–26.

This article explains the current legal position, eligibility conditions, practical considerations, and benefits related to MSME registration for Section 8 companies.

Understanding Section 8 Companies

A Section 8 company is incorporated under the Companies Act, 2013, with the objective of promoting charitable or non-profit activities such as education, social welfare, healthcare, environment protection, research, arts, or sports.

Key features of a Section 8 company include:

  • Profits or surplus must be reinvested to achieve the company’s objectives

  • No dividend can be distributed to members

  • It operates with a corporate structure similar to private or public limited companies

Despite being non-profit, a Section 8 company is a separate legal entity and may generate revenue through permitted activities aligned with its objectives.

What Is MSME (Udyam) Registration?

MSME registration, now issued through the Udyam Registration portal, is a government recognition for enterprises engaged in manufacturing, services, or eligible trading activities.

Udyam registration enables eligible entities to access:

  • Government subsidies and incentive schemes

  • Priority sector lending and easier access to bank credit

  • Protection against delayed payments

  • Preference in government tenders and procurement

MSME registration is not restricted to a particular legal structure; instead, it focuses on economic activity, investment, and turnover.

Latest MSME Classification Criteria (2025–26)

As per the latest MSME classification applicable from 2025, enterprises are categorised based on investment in plant & machinery or equipment and annual turnover:

  • Micro Enterprise

    • Investment: up to ₹2.5 crore

    • Turnover: up to ₹10 crore

  • Small Enterprise

    • Investment: up to ₹25 crore

    • Turnover: up to ₹100 crore

  • Medium Enterprise

    • Investment: up to ₹125 crore

    • Turnover: up to ₹500 crore

Both conditions (investment and turnover) must be satisfied to fall under a particular category.

Can a Section 8 Company Apply for MSME Registration?

Yes, a Section 8 Company Can Apply — With Conditions

A Section 8 company can apply for MSME (Udyam) registration if it satisfies the following conditions:

  1. Engages in Economic or Business Activities
    The company must be involved in manufacturing goods or providing services for consideration. Examples include:

    • Skill development or vocational training programs with fees

    • Healthcare, education, or consultancy services

    • Social enterprises producing and selling goods

  2. Meets MSME Investment and Turnover Limits
    The company’s financials must fall within the prescribed MSME thresholds.

  3. Complies With Statutory Requirements

    • PAN of the company is mandatory

    • GST registration is required if the activity attracts GST under applicable law

If these criteria are met, the non-profit nature of a Section 8 company does not automatically disqualify it from MSME registration.

When a Section 8 Company Is Not Eligible

A Section 8 company is generally not eligible for MSME registration if:

  • It operates purely on donations, grants, or CSR funds

  • It does not carry out any revenue-generating or commercial activity

  • It does not meet the minimum turnover or investment criteria

In such cases, the organisation may be considered a purely charitable entity rather than an “enterprise” under MSME norms.

Practical and Regulatory Considerations

Although Udyam guidelines do not explicitly prohibit Section 8 companies, eligibility is often evaluated case by case. Authorities primarily assess:

  • Nature of activities

  • Source of income

  • Scale of operations

  • Compliance with financial thresholds

Since Section 8 companies often operate in a hybrid model (social purpose with revenue generation), professional guidance from a chartered accountant or legal expert is recommended before applying.

Benefits of MSME Registration for Section 8 Companies

If eligible and registered, a Section 8 company can enjoy several advantages, such as:

  • Access to MSME-focused government schemes and grants

  • Easier bank financing and collateral-free loans

  • Protection under MSME laws against delayed payments

  • Eligibility for government tenders and procurement programs

  • Enhanced credibility with financial institutions and partners

These benefits can significantly help social enterprises scale their impact in a sustainable manner.

MSME Registration Process for Section 8 Companies

The Udyam registration process is completely online and paperless:

  1. Visit the official Udyam Registration portal

  2. Enter the company’s PAN and Aadhaar of the authorised signatory

  3. Provide business details, NIC codes, investment, and turnover

  4. Submit the application (no government fee is charged)

Once approved, the company receives a Udyam Registration Number and certificate.

Final Conclusion

A Section 8 company can apply for MSME (Udyam) registration in 2025–26 provided it carries out eligible economic activities and meets MSME financial criteria. The non-profit status alone is not a barrier; the deciding factors are business nature, turnover, and investment.

However, for organisations engaged only in charitable activities without revenue-based operations, MSME registration is generally not applicable. Evaluating eligibility carefully and seeking professional advice can help avoid rejection and ensure compliance.

If you want, I can also create a quick eligibility checklist or a FAQ section tailored for Section 8 companies applying for MSME registration.