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

Detailed Legal Analysis

To set up a Section 8 NGO (Non-Governmental Organization) in Lucknow, you need to comply with the provisions of the Companies Act, 2013, specifically under Section 8, which allows for the establishment of non-profit companies.

Here are the key requirements and steps to establish a Section 8 NGO:

• Minimum Requirements:
  • A minimum of two directors (for a private company) or three directors (for a public company) who are individuals.
  • A minimum of two subscribers to the Memorandum of Association (MoA).
  • Must have a unique name that reflects the objectives of the NGO.
• Drafting of Documents:
  • Prepare the Memorandum of Association (MoA) and Articles of Association (AoA) stating the NGO’s objectives, which must be charitable in nature.
  • Include the rules and regulations governing the organization in the AoA.
• Registration Process:
  • File the Form INC-1 for name approval with the Ministry of Corporate Affairs (MCA).
  • Once the name is approved, file Form INC-12 to apply for the Section 8 license.
  • Submit Forms INC-7 (for incorporation) and DIR-12 (for directors) along with the required documents, such as identity proof, address proof, and the MoA and AoA.
  • Upon satisfying the requirements, the Registrar of Companies (RoC) will issue a certificate of incorporation.

Tax Benefits: Section 8 NGOs in India enjoy several tax benefits under various laws:

• Section 80G of the Income Tax Act, 1961: Donations made to a registered Section 8 NGO are eligible for tax deductions under Section 80G, which can range from 50% to 100% depending on the NGO's registration.
• Section 12AA Registration: To avail of benefits under Section 80G, the NGO must also obtain registration under Section 12AA of the Income Tax Act, which allows for tax-exempt status on income.
• Goods and Services Tax (GST) Exemptions: Certain services provided by the NGO may also be exempt from GST under the GST Act, provided they meet specific criteria.

By adhering to these steps and fulfilling the requirements, you can successfully establish a Section 8 NGO in Lucknow and enjoy the associated tax benefits.