80g deduction
Section 80g is indeed a boon whether it is trust, society or section 8 company under companies act 2013. An Ngo is registered under Indian Trust Act 1882 where at least 3 members are required whose formation can be done within 15 days. We can also form this ngo under Indian Society 1860 where at least 7 non-family members are required from 7 different states. As compared to registration of trust, a society registration is more complex, hence generally people opt for trust rather than going for society where more complexities are there. As far as companies act is considered, people also go for section 8 company formation where minimum 2 directors are required. In the scenario of section 8 company, we can involve foreigners also as directors. We have to make din and digital signature of both the directors. Here, generally people keep authorized share capital as 1 lakh where stamp duty is paid to ministry of corporate affairs. The more you keep authorized share capital, the stamp duty increases which again varies state to state. The major drawback in section 8 company is that if we fail to file compliance even for a year, there is straightforward penalty of 200 rupees per day per form imposed by the registrar of companies. There is penalty of 5000 rupees per director on non-updation of kyc of directors every year. If you don't file the roc compliance for 2 years, the registrar of companies will strike off your company, your din will become invalid and you can't become a director in any of the companies registered through ministry of corporate affairs till the next five years from the date of strike off. Due to this huge penalties and complexities, people avoid going for section 8 company. Overall, once you opt for trust registration, it is easier to manage where there is no such complexity or penalty is involved. 80g is also essential for tapping government or corporate funding as the receipt issued by ngo having 80g certification will allow the donor to get 50 percent tax benefit while filing his income tax return. So, no ngo misses applying for 12a and 80g registration. Once the formation of ngo is complete, we can proceed for 80g deduction which is essential for getting tax benefits.