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

Detailed Legal Analysis

To set up a Section 8 NGO in Faridabad, you need to comply with the provisions of the Companies Act, 2013, specifically Section 8, which pertains to non-profit organizations. Here are the detailed requirements and tax benefits associated with establishing a Section 8 NGO:

• Founding Members: You need a minimum of two directors if it is a private company, or three if it is a public company.
• Objectives: The main objectives of the NGO should be to promote charitable activities such as education, art, culture, science, sports, and social welfare. These objectives must be specified in the Memorandum of Association.
• Name Approval: The proposed name of the NGO must be unique and not similar to any existing company or trademark. You can apply for name approval through the Ministry of Corporate Affairs (MCA) portal.
• Drafting Documents: Prepare the following documents:
  • Memorandum of Association (MoA)
  • Articles of Association (AoA)
  • Declaration by the directors
  • Affidavit from the directors
  • Identity and address proof of the directors
• Incorporation: File the incorporation application (Form INC-12) along with the required documents to the Registrar of Companies (RoC) for obtaining a license under Section 8.
• Registration under Income Tax: Apply for registration under Section 12AA of the Income Tax Act, 1961, to avail tax exemptions on income generated by the NGO.

Tax Benefits: Section 8 NGOs enjoy several tax benefits, which include:

• Exemption from Tax: Income generated from charitable activities is exempt under Section 11 and Section 12 of the Income Tax Act, 1961.
• Donor Benefits: Donations made to registered Section 8 NGOs are eligible for deductions under Section 80G of the Income Tax Act, which encourages contributions from individuals and corporations.
• GST Benefits: Certain services provided by Section 8 NGOs may be exempt from Goods and Services Tax (GST) under the relevant provisions of the GST Act.

By fulfilling these requirements and understanding the associated tax benefits, you can successfully set up a Section 8 NGO in Faridabad.