I want to set up a Section 8 NGO in Davangere, what are the requirements and tax benefits?

Detailed Legal Analysis

To set up a Section 8 NGO in Davangere, you must adhere to specific legal requirements and processes as outlined in the Companies Act, 2013.

A Section 8 company is a non-profit organization established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, or any other useful objective. Below are the requirements and steps to establish a Section 8 NGO:

• Minimum Requirements:
  • At least two directors (individuals) who are above the age of 18.
  • At least two members (individuals or organizations).
  • Registered office within India.
• Name Reservation:
  • Choose a unique name that reflects the objectives of the NGO.
  • File Form INC-1 with the Ministry of Corporate Affairs (MCA) to reserve the name.
• Drafting Documents:
  • Prepare the Memorandum of Association (MoA) and Articles of Association (AoA) outlining the objectives and rules of the NGO.
  • Include clauses that indicate the non-profit nature of the organization.
• Filing with MCA:
  • Submit Form INC-12 to the MCA for obtaining a license to operate as a Section 8 company.
  • Attach the necessary documents, including the MoA, AoA, and identity proof of directors and members.
• Certificate of Incorporation:
  • Upon approval, you will receive a Certificate of Incorporation from the MCA.

Tax Benefits:

• Section 8 NGOs can apply for tax exemptions under Section 12A and 80G of the Income Tax Act, 1961.
• Section 12A: Registration allows for exemption from income tax on the surplus income of the NGO.
• Section 80G: Donors can claim deductions on donations made to the NGO, which encourages donations.

To avail of these benefits, you must ensure compliance with annual filing requirements and maintain proper accounting records as prescribed under the Income Tax Act and the Companies Act.