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Not for Profit organizations (NPOs)
Nonprofit organizations (NPOs) are formed to promote art, science, commerce, charity, religion or social development and not for personal profit. NPOs do not make profits for their owners, instead, all their revenues are utilized in pursuing the objectives.
A non-profit organisation can be registered in India as
- A Society, under the Registrar of Societies or
- A Trust, by making a Trust deed and getting it registered, or
- A Section 8 Company, under the Companies Act, 2013.
1. Trusts
Public charitable trusts may be established for several purposes, including poverty relief, education, medical relief, the provision of facilities for recreation, and any other objective of general public utility. Indian public trusts are generally irrevocable.
2. Societies
Societies are membership-based organizations that may be registered for charitable purposes. They are usually managed by a governing council or a managing committee and are regulated by the Societies Registration Act which has been modified and adopted by various states. Unlike trusts, societies may be dissolved.
3. Section 8 Companies
Under Section 8 of the Indian Companies Act, the Central Government may issue a license to a limited or private limited company which:
- Has as its purpose the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of the environment, or any such other object;
- Intends to apply its profits, if any, or other income towards promoting its purposes; and
- Intends to prohibit the payment of any dividend to its members.
Whether a trust, society or Section 8 company, the Income Tax Act, 1961 gives all categories equal treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-profit organisations may claim a rebate against donations made. Foreign contributions to non-profits are governed by FCRA regulations and the Home Ministry.
We at SimplyBiz can advise you on the right form for NPO to be chosen, help you set up the NPO and also assist you with the exemption registrations under Section 80A & 12G. We have set up Section 8 companies, Trusts and Societies and provide ongoing support to them.
Please reach us at hi@simplybiz.in with your requirements and we shall be happy to help.