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

Detailed Legal Analysis

To set up a Section 8 NGO in Sambalpur, you need to follow specific requirements under the Companies Act, 2013 and other relevant regulations.

A Section 8 company is a non-profit organization that is established for promoting charitable activities such as commerce, art, science, education, research, social welfare, religion, and environmental protection. Below are the steps and requirements for setting up a Section 8 NGO:

• Minimum Requirements:
  • At least two directors (individuals) are required for a company with no limit on the number of members.
  • The directors must be individuals and can be residents of India.
  • A registered office address in India is mandatory.
• Drafting of Memorandum and Articles of Association:
  • Prepare the Memorandum of Association (MoA) and Articles of Association (AoA) specifying the objectives of the NGO.
  • The MoA must state that the company will not pay dividends to its members and will apply its profits for charitable purposes.
• Obtaining a License:
  • File an application in Form INC-12 with the Registrar of Companies (RoC) for a license to operate as a Section 8 company.
  • Include the MoA, AoA, and a declaration in Form INC-14 by a practicing professional.
  • The RoC will review the application and grant the license if it meets the criteria.
• Incorporation:
  • Once the license is obtained, file the incorporation documents in Form INC-22 and Form DIR-3 KYC.
  • Pay the prescribed fees and obtain the Certificate of Incorporation from the RoC.
• Registration for Tax Benefits:
  • Apply for registration under Section 12A of the Income Tax Act, 1961, to avail tax exemptions on income.
  • Obtain Donations receipt under Section 80G of the Income Tax Act, which allows donors to claim tax deductions.

Tax Benefits: Section 8 companies enjoy various tax benefits, including:

• Exemption from income tax on income generated for charitable purposes under Section 11 of the Income Tax Act.
• Donors can claim deductions under Section 80G, enhancing the attractiveness of contributions.

These steps will guide you in setting up your Section 8 NGO in Sambalpur effectively while availing of the associated tax benefits.