How To Register Non Profit Organization In India

NGO (Non-Government System) is an organization that works for non-turn a profit/ charitable purposes. An NGO established as Section 8 company under the Companies Human action, 2013 ('Human action') is governed past the Ministry of Corporate Affairs ('MCA') whereas the NGO registered as a trust or society is governed past the registrar of state nether the State Regime.

Department 8 company incorporation has more than benefits in comparison to trust and society. This type of visitor has more brownie among government departments, donors, and other stakeholders. In this article, we will explain how to annals every bit an NGO in the form of Section 8 Visitor, under the Companies Deed, 2013.

Laws in India applicative to an NGO

NGOs tin exist registered in India under any of the post-obit laws:

Trust under Indian Trusts Deed, 1882
Lodge under Societies Registration Act, 1860
Section 8 Company under Companies Human action, 2013

Purpose of NGO – Section eight Visitor Incorporation

The main purpose of establishing a company equally a Department viii visitor is to promote not-profit objectives such as the following:

Commerce
Fine art
Scientific discipline
Sports
Education
Research
Social welfare
Organized religion
Charity
Protection of environs
Whatsoever such other object related to the above objects

When the Cardinal Government is satisfied that a person or association of persons propose to establish a limited visitor having the above-mentioned objectives, information technology shall grant a license to register equally a Section 8 visitor under the Companies Deed, 2013 ('Human action').

The profits/incomes of the Department 8 company, if whatsoever, are applied towards promoting the objectives of the company and are not distributed as dividends to its shareholders.

Benefits of Department eight Company Registration

In that location are many advantages of registering an NGO under Section 8 of the Companies Human activity, 2013, which are every bit follows:

No minimum capital: There is no minimum capital requirement for a Section viii company incorporation and the capital structure of Section eight tin can exist altered at whatsoever time as per the growth requirement of the company. Thus, the funds required for carrying the business operations can be brought in later, through donations and subscriptions from members and the general public.

Tax Benefits: The Visitor Accountant's Written report Order (CARO) does not apply to the Department 8 company. A Section 8 company enjoys tax benefits under 80G of the Income Tax Act, 1961.

No Postage stamp Duty: There is no postage stamp duty imposed for Department 8 company incorporation in India. The Section viii company need not pay the postage duty imposed on the Memorandum of Association (MOA) or Articles of Association (AOA) of a individual or public express company.

Divide Legal Identity: Section eight Visitor registration acquires a distinct legal identity from its members. A registered partnership business firm can too become a fellow member in its individual chapters and obtain Directorship of Department eight company. It has perpetual existence and thus, the entry or exit of any member will non affect the operation of the Department eight company.

Limited liability: The members of the Section eight visitor take limited liability as per their share subscribed. They are not personally liable for the losses of the company.

Credibility: Section 8 companies are more than credible and reliable than any other form of a charitable organization. It is regulated under the provisions of the Act, thus they demand to take mandatory audits every year and the Memorandum of Association cannot be altered relating to the non-profits objectives of the company.

Exemption to the donors : The revenue enhancement exemption is granted to the donations received by the section 8 company under Section 12A and 80G of the Income Tax Act, 1961.

Section viii Company Incorporation Eligibility

An Individual, HUF is eligible to offset a Department eight company in India.
2 or more persons who volition act as Directors or shareholders should fulfil all the compliances and requirements of the Section 8 company incorporation under the Act.
There must be at to the lowest degree one director who should be a resident of India in the Section eight company.
The objective must exist ane or more of the following – promotion of sports, social welfare, the advocacy of science and art, educational activity and financial aid to lower-income groups.
Founders, directors, members directors of the company cannot draw any remuneration in any form of greenbacks or kind.
No profit should exist distributed amongst the members and directors of the visitor directly or indirectly.

Section 8 Company Incorporation Requirement

Directors

A minimum of ii directors is required if the Section 8 company is to be incorporated as a private limited company, and a minimum of iii directors in case of incorporation every bit a public limited company. The maximum number of members is 200 in the example of a private limited company, whereas for a public express company, at that place is no such limit.

Capital Requirement and Proper name

There is no requirement of minimum paid-up capital in the case of a Department 8 company incorporation. NGOs established as a Section 8 company need not use the words 'Limited' or 'Individual Limited' in their name.

Charitable Objects

Section 8 companies are incorporated with not-profit objectives. The MOA and AOA must mention the non-turn a profit objective or purpose for which it is established. Any profits earned by the department 8 visitor is utilised for the furtherance of its main objectives, i.eastward. charitable purposes or reinvested in the visitor. The profits will not be distributed amid its members.

Management

Section eight visitor is managed past the Board of Directors as per the MOA and AOA of the company, unlike other trusts that are managed by the Trustees equally per the Trust Human activity.

Regulation under Diverse Acts

A Section 8 company needs to follow the rules and regulations prescribed under the Companies Act, 2013. It needs to maintain books of account, and file returns with the Registrar of Companies. Section 8 company cannot make any changes to the provisions of MoA and AoA without the prior blessing of the Primal Authorities. It also needs to follow the provisions of the Income Taxation Act and GST Police force.

Obtain DSC (Digital Signature Document)

Digital signatures of the proposed directors of the company are required as the forms for the registration procedure are filed online and should be digitally signed. Digital signature certificates (DSC) are issued by a government recognized certifying agencies. The list of such certified agencies can be accessed here. The cost of obtaining a DSC varies depending upon the certifying bureau. Yous must obtain a Class three category DSC.

Apply for Director Identification Number (DIN)

You have to apply for a DIN for the proposed directors of the company. The application for resource allotment of DIN has to exist made in Form DIR-3 or along with the SPICe+ grade for registration. You lot have to attach the scanned re-create of the necessary documents such as a self-attested copy of PAN, Identity and Address proof of directors forth with the form and submit it online on the MCA Portal. The form must be attested by a practising professional who can be a chartered auditor, a company secretary, or a cost accountant.

Forms Required for Section 8 Company Registration

Name of the class	Purpose of the Form
SPICE+	Application for Incorporation of Visitor
INC 12	Application for License
INC 13	Memorandum of Association
INC 14	Proclamation from a practising Chartered Accountant
INC 15	Annunciation from each person making the application
INC 16	License to incorporate as Department 8 visitor
INC 22	Situation of Registered Function
DIR 2	Consent of Directors
DIR 3	Application to ROC to get DIN
DIR 12	Appointment of Directors

Purpose of the Section 8 Company Forms

Grade INC-12

Course INC-12 is filed for the grant of the license to operate as a Section 8 visitor. Along with this form, applicants are required to attach a draft copy of the Memorandum of Association (MOA) and Articles of Association (AOA).

At that place is a prescribed format for Memorandum of Association of a Section 8 company in Class INC 13. The subscription pages of the MOA and AOA shall exist signed past each subscriber along with their name, address, description, and occupation, in the presence of at least one witness.

Form INC 12 is to be submitted along with the post-obit attachments :

INC-thirteen – Memorandum of Clan
Draft Articles of Clan
INC-fifteen for the declaration past each subscriber to MOA that the draft memorandum and articles of association take been drawn upwards in conformity with the provisions of Section 8
Estimated statement of Income & Expenditure for the next 3 years
List of proposed Promoters and Directors of the Company

The following forms are required to be filed after the issuance of the license to the visitor

Grade SPICe+

The SPICe+ course is the awarding for the incorporation of the company. The company tin be reserved in the first part of the SPICe+ plus course. However, simply i proper noun can exist declared for approval in this form. Thus, information technology is recommended that applicants access the free name search facility of existing companies available on the MCA portal before choosing the proper name. The system will provide a list of closely resembling names of the existing companies based on the search criteria. This will help you avoid choosing a proper name similar to that of an existing company.

The following documents must be fastened along with SPICe+ Form:

Memorandum and articles of the company duly signed past all the subscribers
Declaration from each of the subscribers and first directors that they are not guilty of any offence or misfeasance
Annunciation in Form INC 14 and Grade INC fifteen from a Chartered Accountant and each person making the application respectively
Address of correspondence till the registered office is official
Address and Identity proofs of all the subscribers to MOA and commencement directors of the company
Passport size photograph of all the directors and shareholders
Copy of the rental understanding, in case the company registered office, is on a rented belongings

Form INC 22

Form INC 22 is filed for providing notice of the address of the company's registered function. It needs to be filed inside 30 days of the incorporation of the visitor.

Class DIR 12

Form DIR 12 is filed for the date of the directors of the visitor. It must be filed within 30 days from the engagement of the appointment of the directors.

Process for incorporation of a Department viii visitor

Step ane – Obtain a DSC of the proposed Directors of the Section 8 Visitor. Once a DSC is received, file Form DIR-three with the ROC for getting a DIN. The Proof of Identity and Address Proof needs to be fastened for obtaining DSC.

Step 2 – Once the DIR-3 is approved, the ROC will allot a DIN to the proposed directors.

Step 3 – File Form INC-12 with the ROC to apply for a licence for the Section 8 company forth with the attachment of the required documents as mentioned higher up.

Footstep 4 – Once the form is approved, a license nether section 8 will exist issued in Grade INC-16.

Stride 5 – After obtaining the license, file the SPICe+ Form with the ROC for incorporation forth with the required attachments as mentioned higher up.

If the ROC is satisfied with the forms submitted, he issues a Document of Incorporation along with a unique Company Identification Number (CIN).

Punishment for Non-Compliance under Companies Act

The Cardinal Regime volition revoke the Department 8 company license if information technology fails to comply with the legal provisions of the Deed. If the objectives of the company are conducted fraudulently or in violation of the objectives for which it is established, the license can exist revoked.

If a visitor defaults in complying with the provisions of the Deed, the company will be punishable with a fine not less than Rs.10 lakh and may extend to Rs.1 crore. The Directors and the officers of the visitor in default of the provisions of the Deed volition exist punishable with a fine not less than Rs.25,000 which may extend to Rs.25 lakh or both.

Annual Compliances of Section eight Company

The annual compliances of section viii company are just like the other companies.

Conduct a minimum of two board meetings in a year
Maintenance of Books of Accounts
Preparation of financial statements
Mandatory audit report
Income tax return filing
Filing of fiscal statements in course AOC four
An annual render is to be filed every yr with other e- filing forms similar MGT 7
Boosted compliances to fulfil the registration like 12AA, 80G, etc

Disclaimer: The materials provided herein are solely for information purposes. No chaser-client relationship is created when you admission or use the site or the materials. The data presented on this site does not constitute legal or professional advice and should non be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your country.

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