This is the third option. Section 25 of the Indian Companies Act states that a Section 25 company can be set up for promoting commerce, arts, science, religion, charity, or any other useful purpose. This is provided that the profit or income is used exclusively for promoting the objects of the company, and no dividends are paid to the members.

The concept of nonprofit is very clearly emphasized here under Section 25 of the Indian Companies Act. So you get this complete clarity of what is nonprofit under Section 25 of the Indian Act: no profit can be distributed. Also, the "limited" or "private limited" cannot be affixed to the name of a Section 25 company.

When you set up your NGO as a Section 25 company, the process is that you are essentially either a private limited company or a public limited company. Then you go for the special license under Section 25 whereby you will say that any profits made will not be distributed by way of dividends. Instead, they will be retained within the organization for carrying out its objects.

The Centre for Advancement of Philanthropy was one of the earliest organizations established under this act. Other examples include the Chambers of Commerce, which are all registered under Section 25, and the World Trade Center. For the arts, there are arts associations, and for charity, in increasingly modern times, you find organizations like Give India and Magic Bus. All these organizations have chosen to register under this.