In India, there are mainly the following types of non-profit organizations:
Section 8 Company as per Companies Act, 2013 (Section 25 as per Companies Act, 1956)
Societies registered under Section 20 of the Societies Registration Act 1860
Trusts formed under Indian Trusts Act 1880
However, Section 8 Companies are considered best due to its systematic constitutional framework. The financial statements, directors’ report and other important documents of a Section 8 Company are easily available online on public inspection and are therefore, considered most reliable.
A Non-profit Company or Section 8 Company is a Company which:
Benefits of Section 8 Company Registration
Procedure for Incorporation of Section 8 Company under Companies Act, 2013
1. Application for name availability in form RUN
2. Preparation of Memorandum of Association and Articles of Association
3. Application in Form INC-12
4. Filing of SPICe 32 Form
Section 8 Company is a non-profit organization that is why they are exempted from some provisions of the income tax. They are also given numerous other deductions and other tax benefits. One of such exemption is under Section 80G of the Income Tax Act, 1961, whereby donors to non-profit organizations may claim a 50% rebate against donations made. The registration accorded under Section 80G shall be valid for normally a period of one-three years.