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An association can be formed under Article 19 (1)(c) of the Constitution of India. A Non Profit Organisation can 2013be registered in India as a Society, under the Societies Registration Act, 1860 or as a Trust, by making a Trust deed. A third option is registration as a section 8 of the Companies Act, 2013 w.e.f. FRIDAY, AUGUST 30, 2013( old section-25 of the Companies Act, 1956 ).

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 FC(R)A regulations and the Home Ministry. For an organisation to be termed as Charity it requires Income tax clearances under 12 A Clause of Income Tax Act. Section 2(15) of the Income Tax Act defines ‘charitable purpose’ to include‘relief of the poor, education, medical relief and the advancement of any other object of general public utility’. A purpose that relates exclusively to religious teaching or worship is not considered as charitable.


Registering a Non Profit association in India can be done in a total of four ways:

• Trust ( both Central and State Acts like the Bombay Public Trusts Act, 1950 )

• Society ( both Central and State Acts )

• Company under Section-8 of the Companies Act, 2013 ( old section-25 of the Companies Act, 1956 )

• Special Licensing Society: Charitable societies, military orphan funds or societies established at the several presidencies of India, societies established for the promotion of science, literature, or the fine arts, for instruction, the diffusion of useful knowledge, the diffusion of political education, the foundation or maintenance of libraries or reading rooms for general use among the members or open to the public, or public museums and galleries of paintings and other works of art, collection of natural history, mechanical and philosophical inventions, instruments or designs

In addition to registration, a non-profit engaged in certain activities might also require special license/permission.

Some of these include (but are not limited to):

1. A place of work in a restricted area (like a tribal area or a border area requires a special permit – the Inner Line

Permit – usually issues either by the Ministry of Home Affairs or by the relevant local authority (i.e., district magistrate).

2. To open an office and employ people, the NGO should be registered under the Shop and Establishment Act.

3. To employ foreign staff, an Indian non-profit needs to be registered as a trust/society/company, have FCRA registration and also obtain a No Objection Certificate. The intended employee also needs a work visa.

4. A foreign not-for-profit may be registered as a branch, liaison or project office [and not necessarily as an Indian entity] after the requisite permission has been granted by the RBI. Upon receipt of approval from the RBI, the foreign office must within 30 days seek registration under the Companies Act, 1956. Alongside of these permissions, the office must acquire tax registrations.

The Doctrine of basic structure:

Non-profit Company is unique creature of the Companies Act but the Constitution of India has the over riding effect upon it. The salient feature of the Memorandum and Articles of Association of the Company comprising TWO ORGONS such as Managing Committee ( Governing body ) and Board of Directors ( ornamental body ) or vice versa, being basic structure cannot abolish each other by any special resolution, nor Ministry of Corporate Affairs, nor Parliament can abolish it.

The Doctrine of ultra vires to Company:

Any amendment made in the Memorandum and Articles of Association without the prior sanction of the Government or without obtaining the fresh incorporation certificate from the Registrar of Companies is ultra vires to the Company, hence, null and void. The Companies Act, 2013 Section 8(4) (i) A company registered under this section shall not alter the provisions of its memorandum or articles except with the previous approval of the Central Government.

Penal Provision:

The Companies Act, 2013 section 8 (11) If a company makes any default in complying with any of the requirements laid down in this section, the company shall, without prejudice to any other action under the provisions of this section, be punishable with fine which shall not be less than ten lakh rupees but which may extend to one crore rupees and the directors and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than twenty-five thousand rupees but which may extend to twenty-five lakh rupees, or with both: Provided that when it is proved that the affairs of the company were conducted fraudulently, every officer in default shall be liable for action under section 447.


The incorporation certificate granted by the Registrar of Companies is birth certificate of the Company and the Company is always the Dominus Litis, juristic person with perpetual succession and common seal.

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Category Constitutional Law, Other Articles by - A. Patrawala Advocate 


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