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

Detailed Legal Analysis

To set up a Section 8 NGO in Tumkur, you need to comply with the provisions of the Companies Act, 2013, specifically under Section 8, which pertains to companies established for promoting social welfare, arts, charity, or science.

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

• Eligibility Criteria: The NGO must be established with the objective of promoting social welfare, education, art, culture, environment, etc., and should not intend to make profits for its members.
• Minimum Members: You need a minimum of two directors (if a private company) or three directors (if a public company) and a minimum of two shareholders.
• Name Approval: Apply for the name of the NGO through the RUN (Reserve Unique Name) service on the Ministry of Corporate Affairs (MCA) website. The name should contain “Section 8” or “Non-Profit” in it.
• Drafting of Memorandum and Articles of Association: Prepare a Memorandum of Association (MoA) and Articles of Association (AoA) outlining the objectives, rules, and regulations of the NGO as per Section 8 of the Companies Act, 2013.
• File for Incorporation: Submit Form INC-12 along with the MoA, AoA, and other required documents like a declaration by the directors, identity proof, and address proof to the Registrar of Companies (RoC).
• Obtain License: After review, the RoC will issue a license under Section 8, allowing you to operate as a non-profit company.

In addition to the above requirements, NGOs registered under Section 8 can avail various tax benefits:

• Tax Exemptions: Under Section 80G of the Income Tax Act, 1961, donations made to Section 8 companies are eligible for tax deductions for the donor, enhancing the attractiveness of contributing to the NGO.
• Exemption from Income Tax: Section 12AA and 80G registrations allow NGOs to be tax-exempt on the income received, provided the income is utilized for the NGO's stated objectives.
• GST Benefits: NGOs can also benefit from exemptions under the Goods and Services Tax (GST) Act for certain services rendered for charitable purposes.

It is advisable to consult with a legal expert or company secretary to ensure compliance with all applicable regulations and to facilitate a smooth registration process.