NGO COMPLIANCE
SECTION - 8 COMPANY IN COMPLIANCE
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SECTION 8 COMPANY
COMPLIANCE OF A SECTION 8 COMPANY
Soon after the Registration of a Section 8 Company, a lot of things need to be done, which would make the process of running a successful Section 8 Company much more efficient and, in fact, easy to manage.
Some of the processes after the incorporation of the Company are mandatory procedures or compliances listed, monitored and regulated by the Constitution of India. At the same time, others are optional but will be extremely useful for the organization’s smooth-running process.
As soon as you set up and incorporate your Section 8 Company, Taxkey advises you to follow the processes mentioned below. As discussed earlier, some procedures are mandatory, while others are subject to the directors’ interest or the organization’s nature.
- Applying for Permanent Account Number (PAN) for the organisation.
- Applying for Tax Deduction/Collection Account Number (TAN) for the organisation.
- Opening a Bank Account (Current Account) for your Section 8 Company.
- Applying for 12AB and 80G Certifications.
- Darpan Registration
- Corporate Social Responsibility (CSR) Registration
PAN & TAN
PAN & TAN REGISTRATION
Starting a Private Limited Company in India can provide several advantages, some of which include:
The Government has made it mandatory for any organization (including Charitable NGOs) to apply for PAN as it will help them monitor and regulate all the organization's transactions. This protocol has been followed strictly in recent years to avoid organizations misusing the benefits offered to NGOs that work towards the welfare of society. It will also fortify the fact that the registered NGO is a legal entity that can perform several operations independently.
Note: It is also mandatory to have a Permanent Account Number for opening a Bank Account in the name of the NGO.
An NGO, like any other organization, may employ people to manage its assets. For instance, a Charitable NGO may employ an Event Manager to organize all the special events for downtrodden children. This employee needs to be paid, and his salary is taxable by law. Similarly, the NGO may employ any number of employees to take care of its operations. In this case, an NGO has the ability to deduct Tax at source and is liable to annual TDS filing, for which TAN Registration is mandatory. Hence, Taxkey advises every Founder of the NGO to register their TAN application soon after receiving your Registration Certificate. Click here to know more about the TAN Registration process.
Opening a Bank Account:
As mentioned earlier, after registration, your NGO is a separate legal entity. In order to perform financial transactions (i.e., sending and receiving of funds), a Bank Account is mandatory. An NGO can choose and associate with any bank based on its preference to open a bank account and perform transactions.
12AB AND 80G CERTIFICATES
APPLYING FOR 12AB AND 80G CERTIFICATES
Since a Section 8 Company is a Non-Profit organization and works towards a cause that benefits society, it is eligible for Tax Exemption both to the company as well as its Donators. But, to enjoy these benefits, a Section 8 Company should acquire 12AB and 80G Certifications. A 12AB Certification is required for a Section 8 Company to enjoy Tax exemptions on any revenue-generating operations and on the donations received.
An 80G Certification is mandatory for a Section 8 Company to transfer Tax Benefits to its donors.
REGISTRATION
DARPAN REGISTRATION.
A Darpan ID is one of the most valuable assets of an NGO specializing in Social Welfare Activities. The Darpan Registration is an initiative of NITI Aayog (National Institution for Transforming India) to bring Government and Voluntary Organizations together and build an ecosystem of people who intend to work toward the welfare of the country. NGOs registered under the Darpan initiative of NITI Aayog are recognized by the Indian Government and are given first preference to receive funds from the Indian Government.
Since a Section 8 Company works towards the welfare and development of Fine Arts, Science, education, knowledge sharing etc., a Darpan Registration would make it much easier for the Section 8 Company to further its cause.
CSR REGISTRATION
CORPORATE SOCIAL RESPONSIBILITY (CSR) REGISTRATION
Any NGO which performs charity work, which has both 12AB and 80G Certifications and has a proven track record of undertaking charity activities for a minimum of three years, is eligible for CSR funding. The respective NGO should mandatorily register with the Central Government of India by filing the CSR-1 e-Form.
Other Mandatory Compliances for running a Section 8 Company.
The following are the other basic yet mandatory compliances of a Section 8 Company
- Preparation of the financial statements.
- Appointment of an Auditor to properly audit the accounts
- Maintenance of Statutory Registers
- Organizing Board meetings and recording the outcomes.
- Annual filing of Tax Returns.
Taxkey will guide you through each and every step of the Compliance process and will help you in meeting the required standards.
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