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What is NGO i.e. Sec 8 Company?
- Registered under Section 8 of the Companies Act, 2013, which is established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other object, provided the profits, if any, or other income are applied for promoting only the objects of the company and no dividend is paid to its members.
- Therefore, a Section 8 Company or a Section 25 Company is a company registered under the Companies Act, 2013, for charitable or not-for-profit purposes.
- It is similar to a trust or society, except that a Section 8 company is registered under the Central Government’s Ministry of Corporate Affairs. Trusts and societies are registered under state government regulations.
Registering an NGO (Non-Governmental Organisation) in India typically involves choosing a suitable legal structure and following the registration process under the relevant law. The most common legal structures for NGOs in India are as a society under the Societies Registration Act, 1860, or as a trust under the Indian Trusts Act, 1882. NGOs can also be registered as Section 8 Companies under the Companies Act, 2013, if they intend to operate on a larger scale or have specific operational needs.
Legal Structure:
- Decide whether to register the NGO as a Society or a Trust based on the organizational goals, management structure, and operational requirements.
Registered Office:
- Determine the location of the registered office of the NGO, which must be within the jurisdiction of the respective Registrar (for Society or Trust).
Stamp Duty:
- Prepare the necessary documents (MoA, Rules and Regulations, Trust Deed) on non-judicial stamp paper as per the applicable stamp duty rates.
- Jurisdiction: Registration of NGOs (Society or Trust) is regulated by the Registrar of Societies or the Registrar of Trusts appointed by the state government where the registered office of the NGO is situated.
- Tax Exemption: NGOs typically apply for tax exemptions under Sections 12A (for exemption from income tax) and 80G (for exemption to donors from income tax) of the Income Tax Act, 1961, after registration.
- Management: Societies are managed by a governing body elected or appointed from among its members, while Trusts are managed by Trustees as per the Trust Deed.
Preparation of Documents:
- For Society:
- Memorandum of Association (MoA): Outline the objectives and aims of the society.
- Rules and Regulations (Bye-laws): Specify the internal management, administration, membership criteria, and operational procedures.
- List of Governing Body Members: Names, addresses, occupations, and signatures of the members who will manage the society.
For Trust:
- Trust Deed: Clearly state the objectives, activities, and beneficiaries of the trust.
- Details of Settlor and Trustees: Names, addresses, occupations, and signatures of the Settlor(s) and Trustees.
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