Example Letter Of Application For Certification Of Tax Exemption: Fill & Download for Free

All About GST on Export of Software ServiceGoods & Services Tax (GST):GST is the complete mechanism to bring in numerous indirect taxes under one umbrella and thus rationalising the whole tax system. GST engulfs Central Goods & Services Tax (CGST), Integrated Goods & Services Tax (IGST), State Goods & Services Tax (SGST), Union Territory Goods & Services Tax (UTGST). When any sales are made within a state, then CGST & SGST/ UTGST are applied as GST taxes. When Purchase/ Sales cross the border of a state, then IGST is applied.Zero- rated supplyZero-rated supply meansExport of goods or services orSupply of goods or services to Special Economic ZoneTypes of Business OrganisationsBusiness organisations & operations can be of different types. One, which we are covering here specifically are those which are captive unit. Captive units are those which are controlled and governed by parent company which is located abroad. Whatever the Indian unit does, it is for the foreign parent only. All the services of Indian company are consumed by parent company. Thus operating as a backend office and hence termed as captive unit.Another form of organisation being dealt here is an independent organisation which exports software services to its clients who are located abroad.The difference is that such independent organisations do not cater to only one parent company and is not operating as a backend office for only one client.Taxable Event / Time of SupplyTaxable event means the point of time when provision of service will be taxed. In case of such service exporter, the point of taxable event will be:Place of SupplySince the service is being exported out of India, here the supply will not be the place of consumption of service, rather it will be the place of actual provision of service i.e. India. E.g. Service is being provided from Delhi office and is exported directly to parent company located in USA, or client located in USA, the place of supply will be Delhi.If multiple locations in India are being used to supply such service to foreign company, the point of provision of service will be the place from where invoice is raised. In case the place of supply is not identifiable then place of supply will be the place which is most directly related with such supply.Registration RequirementIf the Indian service provider is already registered under Service Tax, migration is to be done before 30.06.2017 or from 01.07.2017 as per the provisions or arrangements made by Govt.If there is more than one place of such service provision, all of them are to be registered under GST having same PAN but different state GSTIN. IEC (Import Export Code) is to be mentioned while taking registration under GST. Such place of provision of service must be having reasonable permanent establishment from where services can be provided. Registration is required only for the places from where supplies are being made.Export of Software service is not covered under composition scheme, hence, regular registration is to be done. Compulsory registration is required for exporters under GST even if the turnover is less than Rs.20 Lakhs.Value of SupplyValue of supply is the transaction value on which the bills are raised. This transaction value can include incidental expenses like packing, commission, interest or late fee/ penalty for late payment or subsidies but not to include GST. Also, discount in invoices decided after the supply is made cannot be reduced from transaction value.If the transaction value is not determinable, specifically in the case of providing software export service to foreign parent company, Transfer Pricing provisions have to be referred. Hence, Transfer Pricing Study plays an important role and is to be conducted in time with the help of proper consultation.Consumption of ServiceConsumption of outward service here will be in foreign territory. Consumption which actually is to be considered would be inward supplies which will act as input and input tax paid can be claimed as refund. Inward supplies means supplies of goods or services received from vendor for executing software export service.What is INPUTInput means all those services and materials used directly for the purpose of rending the service. In the present scenario, some of the examples of Input would be:Internet facility, Stationery, ConsumablesManpower, Security Guard, Annual MaintenanceComputer maintenance services, Insurance of employeesIt is important to mention that there are various inputs on which input credit is not available. Such inputs include:Motor Vehicles, Food & Beverages, Outdoor Catering, Beauty treatment, Health Services, Cosmetic & Plastic SurgeryMembership of Club, health & fitness centre, Rent-a-cab, life insurance and health insurance.Travel benefits extended to employees on vacation such as leave or home travel concessionWorks contract services for construction of immovable property (except plant & machinery)Supplies received for construction of immovable property (except plant & machinery) taken up on own.Taxes paid to suppliers who are under composition levy scheme., any goods or services used for personal consumptionGoods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.Taxes paid on account of order by department for wilful default, confiscation or detention in transit. Confiscation and detention in transit apply in case of goods, hence, it is not applicable on present scenario of export of software services.It is to be noted that input tax credit will be allowed before 20th October after the end of financial year to which such input tax credit pertains or filing of annual return, whichever is done earlier. Last date for furnishing annual return under form GSTR -9 is 31st December after end of Financial Year. It is hereby suggested to file annual return by 20thOctober so that there is no accidental chance of losing any credit.Apportionment of Credit:If input goods or services are used partly for the purpose of providing such software export service and partly for other purposes, credit of input tax will be available only for portion actually used for such service export business.If input goods or services are being used for exempted goods or services, then such portion will not be allowed as input credit. In the present scenario, software export services are Zero Rated, not exempt, hence, input portion on these Nil rated services will be allowed for set-off from output tax liability. However, since there is no output tax liability, such input will be refunded.Input of Capital GoodsCapital Goods are those which are capitalised in the book of accounts and are not short-term in nature. When such capital goods are purchased, the buyer pays excise/ VAT on them. In the present law, the credit of such taxes or duties paid is available in two years at 50% each. The whole amount of duty/ tax paid is booked in full, however, while discharging output tax liability, 50% of input credit on capital goods is available for set-off.However, in GST 100% credit is allowed at the time of purchase. If depreciation has been claimed on the tax component of capital goods, input tax credit of such tax component is not allowed.Reverse Charge Mechanism (RCM)Reverse Charge Mechanism is applicable to all persons registered under GST. Any person registered in GST takes services or materials from an unregistered person, then such registered person has to pay applicable GST on such input or input services. Such reverse payment of taxes by receiver of supply is called Reverse Charge Mechanism. The payer will get credit of such tax paid on reverse charge. In present scenario, since the supply is Zero Rated, hence, tax paid under reverse charge will be refunded.Services imported which are utilised for the purpose of rendering software export service are covered under reverse charge mechanism, indicating that GST on import service is to be paid under reverse charge. If tax on such import services have been paid in full before the implementation date of GST, then no tax is to be paid after GST date. However, if no or part payment has been paid, then any payment paid after implementation of GST will be taxed under GST provisions.Input Service Distributor (ISD)There are situations when the business is operated from different locations. However, only one office receives all the invoices of input goods & services. The tax paid on such services by the said office is then distributed to other working offices according to their contribution in providing the software export service. This office which distributes Input Tax Credit (ITC) is called Input Service Distributor (ISD).Points noteworthy for ISD:For distributing such credit, it is necessary that all the offices are registered under same PAN and ISD is to be registered as ISD while taking registration under GST.Mandatory registration of ISD is required under GST regime.GST Return of ISD will be GSTR-6 which is to be filed by 13th of the next month.Other office to which ISD distributes credit has to accept or reject such credit between 15th – 17th of the next month.Input credit available from services received prior to the day of implementation of GST and invoices received after the date, such input credit shall be eligible for distribution.Conditions for distribution of credit by ISD:The ISD can distribute credit against a document.Excess credit is not to be distributed.Credit attributable to a particular office to be distributed to that office only.If there are more than one office to whom credit is to be distributed, then, pro- rata distribution to be done based on turnover.InvoicingInvoicing for Software Export service providers is not a very big concern as the provisions are same, however, only format has been changed. For understanding purpose, a draft format is being enclosed at the end of this book. Only few major parts to be understood:Service Accounting Code (SAC): This is the code that is assigned to each type of services. Depending upon theexact classification of the service, it is to be mentioned on the invoice.Type of GST: The invoice format has CGST, SGST and IGST as separate columns to be filled for tax portion. Here, nothing will be mentioned as software export services are Zero Rated.The text to be used is: “Supply Meant For Export On Payment Of IGST” – if IGST has been paid on the exports. “Supply Meant For Export Under Bond Or Letter Of Undertaking Without Payment Of IGST”– if IGST has not been paidPayment of TaxesThough, output tax liability is disregarded in this scenario as Software Export service is Zero Rated, however, tax payments may arise on account of:Interest, late fee or any other paymentTax, interest, penalty as awarded by GST Department officerReverse ChargeRefundUnderstanding refund mechanism is important in export service business. The reason being such services are zero rated, however, tax is paid on inputs which is refundable. Proper method has been devised for claiming refund for every month. Following points are worth understanding for smooth flow of refund:Electronic cash or credit ledger contains details of taxes, interest, penalty, fees etc. paid or to be paid. The balance after netting off payable and paid tax maybe payable or refundable.Refund can be claimed by furnishing returns as specified.Documents specifying that pa yment of such input have been made and such tax burden has not been passed on to the customer.If such refund is less than Rs. 2 Lakhs, a declaration in place such documentation would be sufficient for this purpose.The Departmental Officer referred to as Assessing Officer, will refund 90% of the total refund, on a provisional basis until clearance of complete refund based on assessment of documents. Such complete assessment will be done in 60 days from the date of receipt of application by the officer.The order will be passed for this refund in FORM GST RFD -04.Such refund will be paid directly to the applicant by issuing a payment advice in FORM GST RFD -05.If default has been committed in filing of returns or payment of any tax, interest etc, the officer may hold the payment of refund and also can deduct any tax, interest, penalty from the refund amount before payment of such refund. The order will be in FORM GST RFD- 06.If the whole of refund is completely adjusted against such pending demands, such details will be made available in Part A of FORM GST RFD -07.If officer is of the view that refund is being claimed by fraud and the matter is under litigation at higher authorities, the whole amount of refund will be on hold. Such order will be made available in Part B of FORM GST RFD -07.If the matter after litigation results in granting of refund, the amount of refund held, will be paid with interest upto 6% maximum.The relevant date from where refund will be counted as eligible will be:The date of receipt of payment if services rendered before receipt of payment.The date of issue of invoice if payment is received as advance before issue of invoice.Where refund arises as a result of any order by authority or court and application for refund is filed after such order, the same shall be paid with interest upto 9% if refund is not paid within 60 days from such application.Where such services are exported, STPI certificate is to be obtained for proving export of service.Services given to units under Special Economic Zone are to be treated in similar fashion as exports. It shall be noted that when such service is given to SEZ, a specified officer of SEZ certifies receipt of services. That certificate is to be kept in record for refund purposes.Documents required for refund:A statement containing the number of and date of invoices, Bank Realisation Certificate or Foreign Inward Remittance Certificate.Services made to a Special Economic Zone – A statement containing the number and date of invoices, the evidence regarding endorsement and the details of payment, along with proof.A declaration that SEZ unit or SEZ developer has not claimed input tax credit of tax paid by supplier of such software services.A declaration to the effect that burden of Tax, interest or any other amount claimed as refund has not been passed on to any other person, where amount of refund is less than Rs.2 Lakhs.For the sake of knowledge of the reader :- A certificate from Chartered Accountant or a cost accountant is to be annexed in Form GST RFD – 01, which will certify that burden of tax that has been claimed as refund, has not been passed on to any other person. Such certificate is required in case the refund amount is greater than Rs.2 Lakhs.However, in case of Zero Rated supplies, such certificate is not required to be furnished.When refund becomes due, resulting from order of authority or court, reference number of the order and a copy of the order.In case of supply without payment of tax under bond or letter of undertaking i.e. with or without payment of Integrated Goods and Services Tax, refund of input tax credit shall be granted as per the following formula:Refund Amount = (Turnover of zero-rated supply of services) x Net ITC ÷ Adjusted Total TurnoverWhere,-“Refund Amount” means the maximum refund that is acceptable;“Net ITC” means input tax credit availed on inputs and input services during the period;“Turnover of zero-rated supply of services” means the value of the software service rendered without payment of tax under bond or letter of undertaking, calculated in the following manner:-Zero-rated supply of services is the total of payments received during the period for such supply of services and supply of services completed for which payment received in advance in any period prior to the relevant periodSubtracted byadvances received for services for which the supply of services has not been completed during the relevant period;“Adjusted Total turnover” means the turnover of software services excluding any exempt supplies turnover.This definition of adjusted total turnover has been modified keeping in view limited scope of the topic.Acknowledgement of application for refund filed will appear in FORM GST RFD -02 on portal and will be available for viewing to the applicant within 3 to 15 days.If there are any deficiencies, such deficiencies will appear in FORM GST RFD – 03 on portal.The refund granting is subject to a condition of non- prosecution of applicant for evading tax of more than Rs.2.5 Crores in the preceding 5 years.Where the officer or authority is satisfied that no or part of refund is not allowable, a notice will be issued in FORM GST RFD -08 asking the applicant to furnish their reply in FORM GST RFD -09 within 15 days. Thereby making final order in FORM GST RFD -06.A Ledger is maintained on portal for payable or credit available to be utilised. Refund mechanism to operate by debiting or crediting the ledger balance.Maintenance of database, documents or records:Database needs to be maintained to ensure smooth data flow along with processing and feeding of any informationwhile complying with GST Law. Although complete database maintenance is case specific, however, major points have been highlighted:Vendor Details: Name, Address, PAN, GSTIN, HSN Code of goods being purchased, SAC (Service Accounting Code) of services.Buyer Details: Name, Address, PAN, GSTIN, SAC (Service Accounting Code) of services.Backup of all entries being feeded whether through accounting software or through maintenance of excel sheets.All bills of inward supplies being goods or services consumed, all invoices raised to customers, Credit notes, debit notes, receipt vouchers, payment vouchers, refund vouchersCalculation done for netting off output tax liability and input tax credit. In the present case, the output tax liability will be Zero.All applications for refund and their complete files for refund processing, all sorts of communication with GST department.Certificate from STPI (Software Technology Park of India) for approving Software Services being exported, Foreign Inward Remittance Certificate, all type of communication with customer with regard to rendering of service.IEC (Import Export Code) certificate, Bank StatementsAccounts Books to be properly maintained and kept upto date.Returns to be filed & their timing:S. No.GST ReturnPurposeDue Date1.GSTR – 1Outward Supplies being Software Services10th of Next Month2.GSTR – 2Inward Supplies received15th of Next Month3.GSTR – 3Monthly Return for netting off Output & Input tax20th of Next Month4.GSTR – 6Return for Input Service Distributor13th of Next Month5.GSTR – 9To be filed by all persons covered under GST31stDecember of Next Financial Year*Any Rectification/ omission can be taken care of only in next return.Credit of Existing InputsCredit of existing inputs lying as on 30.06.2017, will be carried forward and can be claimed by filing form GST TRAN -1 by 30.09.2017.How to integrate with GST ReturnsManual Feeding provisions have been made for filing GST Returns with some information being auto-populated. However, purchasing a recognised accounting software and hiring consultants for monthly review & filing is much favourable.Few Other important FactsDeemed Export means export to EOU/ STPI/ Consulate/ Embassy etc.Export, Supply to Special Economic Zone and Deemed Exports can be viewed under the same light with some particular differences.Once voluntary registration is taken it cannot be surrendered for 1 year.Once registration is taken, exemption limit of Rs.20 Lacs do not apply, i.e. all provisions are to be complied in totality.Business organisation must authorise a person for handling compliance for ease of use in terms of signatures and other verification part including dealing with GST department.Annexure – 1Form GST PMT – 01 is a liability register which will show liabilities in terms of tax, interest, penalty, late fee or any other amount payable.Form GST PMT – 02 will show input tax credit available.Form GST PMT – 03 will be used by GST Officer for making order of any rejection of refund.Form GST PMT – 04 will be used for communicating any discrepancy in tax liability data to the GST Officer.Form GST PMT – 05 is the cash ledger account which will depict tax, interest, penalty, late fee or any amount deposited or paid therefrom.Form GST PMT – 06 will generate challan for entering details of payment for tax, interest, penalty, fee etc. Such challan will be valid for 15 days.Form GST PMT – 07 where payment as per challan has been deducted from bank but challan identification number was not generated, this form will be used to show the initiation of payment.Annexure – 2Summary of Refund FormsSr. NoForm NumberContent1.GST RFD-01Application for Refund2.GST RFD-02Acknowledgement3.GST RFD-03Deficiency Memo4.GST RFD-04Provisional Refund Order5.GST RFD-05Payment Advice6.GST RFD-06Refund Sanction/ Rejection Order7.GST RFD-06Interest on delayed refund order (same as refund order)8.GST RFD-07Order for complete adjustment of sanctioned Refund/ order for withholding of refund9.GST RFD-08Notice for rejection of application for refund10.GST RFD-09Reply to show cause notice11.GST RFD-10Application for Refund by any specialize agency of UN or Multilateral Financial Institution and Organization, Consulate or Embassy of foreign countries, etc.Disclaimer : The above content was Reproduced from a Professional website , except with minor changes

I went through the U.K. marriage (“fiancee”) visa process last fall and just completed my further leave to remain application.Here’s what we submitted for each part.Fiance(e) visaCritically, you need to show that your British partner has annual income of at least £18,600/year or has eligible savings. There are several ways to do this; the most straightforward is if your partner has been employed by the same company for at least 6 months and can supply 6 months’ worth of payslips, a letter from their employer and bank statements with deposits matching what’s on their payslips. You can also meet the requirement through savings or self-employment or some combination of savings and employment; the visa application guidelines will give options for how to meet the income/savings requirement. If you do not meet this threshold (barring an exemption) and/or if you don’t submit proper documentation, your application will be refused.If you’re submitting a letter from your partner’s employer, it should include contact information for the company, your partner’s job title, how long they’ve been with the company and their salary. In our application, we submitted a letter from my then-fiance’s company, had his HR sign his past 6 payslips to verify their authenticity and then submitted 6 months of bank statements, where the deposits into his bank account matched his payslips.The second critical component after proving your partner’s income is proving that you’re in a legitimate relationship. We submitted flight, hotel, train and holiday bookings, photos of the two of us together, excerpts from email and WhatsApp exchanges that were dated and time-stamped to show an unbroken line of communication (my rule of thumb was one WhatsApp and/or email excerpt per month we’d been together but that might be excessive). If you’re getting married and have made bookings or inquiries in the U.K. for your wedding — registrar’s office, venues, that sort of thing — you can include documentation for that as well.Your fiance should have accommodation that’s suitable/available for you to live in when you move. You’ll need to answer questions about this in the main application and it’s a good idea to submit proof of address with your supporting documents. We submitted my then-fiance’s tenancy agreement but council taxes, mortgage statements, utility bills, etc. can also work.If you’re applying from a country where you’re not a citizen or don’t have permanent residency status, it’s a good idea to submit evidence that you’re there legally. I applied from Belgium, where I wasn’t a citizen but instead held a residency permit, and I submitted a copy of my Belgian residency and work permits and documentation from my work (payslips and my contract, as well as a copy of my lease). My payslips couldn’t count toward the visa’s income requirement, but it showed I was in Belgium doing what I said I was doing and was following immigration law there.Depending on your country of origin you may need to take an English proficiency test and/or have a tuberculosis test. The U.K. Visas and immigration site will have guidance on whether you need to do either of these.You’ll need to submit the main application and then the appendix specifically for the fiance visa. The main application will have very specific, very detailed questions about your fiance (sponsor in immigration lingo), your travel history and your immigration history. If you’ve traveled extensively, take care that the dates you give match what’s in your passport. You’ll also be expected to be up front about any prior visa refusals, not just from the U.K. For example, if you’ve been refused a Schengen visa or a U.S. visa, they’ll want to know about it.Note that it’s quite expensive to apply for the fiance visa from outside the U.K., and there’s no way to apply for this one from within the U.K. I believe it’s about £1,500 and the full payment is expected at the time of application. Any expedited or special services you tack on through third-party vendors will be extra. You’ll also need to submit biometric information — fingerprints, a new ID photo and a signature.Once you have the fiance visa, you’re able to travel to the U.K. to get married and must apply for further leave to remain — the FLR (M) category — before your initial fiance visa has expired. You can apply for the extension at any time after you’re married. Bear in mind that you will not be able to get married immediately after traveling to the U.K.; I had to spend seven “clear” days in the U.K. before we could give notice, and we had to have our notice published publicly for 28 days before we could get married. Be sure to account for this time so you don’t end up in a time crunch applying for your extension.Spouse visaAll that paperwork you submitted to prove your partner met the income threshold? You get to do that all over again, and you need to provide the same information: 6 months of verified payslips with matching bank statements, plus the employment letter with all the aforementioned information.They want to make sure you actually got married. You should absolutely include your marriage certificate. We also included some photos of our wedding day and scans of cards we received.They also want to make sure you’re now living together. You don’t need to have a mountain of paperwork (that’s more for the 2.5- and 5-year mark, where they expect you to have strong documentation of cohabitation and shared financial obligations) but you would ideally have a tenancy agreement, perhaps council tax or utility bills or something official that shows you reside at the same address. It must have come in the post; you can’t just print stuff off online. In our case we had two council tax bills, our new tenancy agreement and an account setup confirmation from the water utility.You’ll now need to pay the NHS surcharge for the duration of your residency permit. It’s £400 a year now, so a 2.5-year permit will cost £1,000. This will need to be paid in full at the time of the application.You’ll also need to pay roughly £1,000 for the application fee (this is on top of what you paid earlier for the fiance visa). You can choose to pay more for expedited service.There’s an online application you’ll need to complete again, as well as declarations for you and your partner to complete and sign affirming that your marriage is genuine and giving the Home Office permission to run checks.You’ll also need to do biometrics again, so fingerprints, ID photo and signature. You can choose to do this at a satellite site close to you operated by a UKVI contractor. It’s fairly straightforward. They will also assist you with scanning and uploading your supporting documentation.In general my three pieces of advice are:Have plenty of savings. You can’t work in the U.K. on a fiance visa; you can only work once your spouse visa has gone through. Ideally — bearing in mind that you’re in a time crunch, as you need to apply for your extension before your fiance visa expires, regardless of at what point in your visa’s validity you get married — you’ll have money for your fiance visa, your eventual NHS surcharge and the spouse visa extension already saved up when you make your initial application. This is really the only way to 100% guarantee you don’t run out of money or have a shortfall. I had all of my visa-related fees in hand before I applied; I didn’t rely on future earnings, nor did I expect my fiance to pay the fee as his earnings needed to support both of us while I was out of work.Do not cut corners or underestimate how stringent the income requirement is. This is probably the top reason for a rejection — someone’s missing a bank statement, they don’t include payslips, the deposits don’t match the payslips, the income is too low, etc. This absolutely will fuck you up if you don’t have the right documentation.Triple-check everything and keep everything because you’ll probably need it later. Check your passport stamps to make sure your entry dates match up. Make sure you’re not missing anything. Make sure you sign anything that needs to be signed. This is not something to do quickly or half-assed. Give yourself enough time, have someone else look over it if possible to check after you with fresh eyes. Work on it, give it a day and look it over again — I bet you find a mistake you made. As soon as you’re set up with your fiance, start saving up council tax bills, doctor’s letters, utility bills, anything from your landlord, etc. Start preparing for your extension immediately and it will be easier to do when the time comes than if you’re lax with paperwork and have to go back and find year-old water bills later on.Good luck.

Congratulation for deciding to start NGO, for staring NGO no need to money your design is important Maximum you have to invest Rs. 50 if you are very well aware about process of Govt of India, for proposal submission Govt charge Rs. 10 ,and other Rs. 40 for preparing Document ,here is detail NGO registration method share with you …NGO Registration Methods - 11. Trust 2. Society, and 3. Non profit CompanyIn India non profit organisations/ public charitable organisations (NGO) can be registered as trusts, societies, or a private limited non profit company, under section-8 companies. Non-profit organisations in India (a) exist independently of the state; (b) are self-governed by a board of trustees or ‘managing committee’/ governing council, comprising individuals who generally serve in a fiduciary capacity; (c) produce benefits for others, generally outside the membership of the organisation; and (d), are ‘non-profit-making’, in as much as they are prohibited from distributing a monetary residual to their own members.Section 2(15) of the Income Tax Act – which is applicable uniformly throughout the Republic of India – 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. Thus, in ascertaining whether a purpose is public or private, one has to see if the class to be benefited, or from which the beneficiaries are to be selected, constitute a substantial body of the public. A public charitable purpose has to benefit a sufficiently large section of the public as distinguished from specified individuals. Organisations which lack the public element – such as trusts for the benefit of workmen or employees of a company, however numerous – have not been held to be charitable. As long as the beneficiaries of the organisation comprise an uncertain and fluctuating body of the public answering a particular description, the fact that the beneficiaries may belong to a certain religious faith, or a sect of persons of a certain religious persuasion, would not affect the organisation’s ‘public’ character.Whether a trust, society or section-8 company (previous section 25), the Income Tax Act 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.CAF would like to clarify that this material provides only broad guidelines and it is recommended that legal and or financial experts be consulted before taking any important legal or financial decision or arriving at any conclusion.Formation and Registration of a Non -Profit organisations in India1) Trust2) Society3) Section-8 Company (previous section 25)Additional Licensing/ RegistrationI. Trust RegistrationA public charitable trust is usually floated when there is property involved, especially in terms of land and building.Legislation : Different states in India have different Trusts Acts in force, which govern the trusts in the state; in the absence of a Trusts Act in any particular state or territory the general principles of the Indian Trusts Act 1882 are applied.Main Instrument : The main instrument of any public charitable trust is the trust deed, wherein the aims and objects and mode of management (of the trust) should be enshrined. In every trust deed, the minimum and maximum number of trustees has to be specified. The trust deed should clearly spell out the aims and objects of the trust, how the trust should be managed, how other trustees may be appointed or removed, etc. The trust deed should be signed by both the settlor/s and trustee/s in the presence of two witnesses. The trust deed should be executed on non-judicial stamp paper, the value of which would depend on the valuation of the trust property.Trustees : A trust needs a minimum of two trustees; there is no upper limit to the number of trustees. The Board of Management comprises the trustees.Application for Registration :The application for registration should be made to the official having jurisdiction over the region in which the trust is sought to be registered.After providing details (in the form) regarding designation by which the public trust shall be known, names of trustees, mode of succession, etc., the applicant has to affix a court fee to the form and pay a registration fee which may range differently, depending on the location and value of the trust office and trust property.The application form should be signed by the applicant before the registrar, sub-registrar, deputy registrar, regional officer or superintendent of the regional office of the charity commissioner or authorised registrar. The application form should be submitted, together with a copy of the trust deed.Two other documents which should be submitted at the time of making an application for registration are affidavit and consent letter.II. Society RegistrationAccording to section 20 of the Societies Registration Act, 1860, the following societies can be registered under the Act: ‘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.’Legislation : Societies are registered under the Societies Registration Act, 1860, which is a federal act. In certain states, which have a charity commissioner, the society must not only be registered under the Societies Registration Act, but also, additionally, under the Bombay Public Trusts Act.Main Instrument : The main instrument of any society is the memorandum of association and rules and regulations (no stamp paper required), wherein the aims and objects and mode of management (of the society) should be enshrined.Trustees : A Society needs a minimum of seven managing committee members; there is no upper limit to the number managing committee members. The Board of Management is in the form of a governing body or council or a managing or executive committeeApplication for Registration :Registration can be done either at the state level (i.e., in the office of the Registrar of Societies) or at the district level (in the office of the District Magistrate or the local office of the Registrar of Societies).(2)The procedure varies from state to state. However generally the application should be submitted together with: (a) memorandum of association and rules and regulations; (b) consent letters of all the members of the managing committee; (c) authority letter duly signed by all the members of the managing committee; (d) an affidavit sworn by the president or secretary of the society on non-judicial stamp paper, together with a court fee stamp; and (e) a declaration by the members of the managing committee that the funds of the society will be used only for the purpose of furthering the aims and objects of the society.All the aforesaid documents which are required for the application for registration should be submitted in duplicate, together with the required registration fee. Unlike the trust deed, the memorandum of association and rules and regulations need not be executed on stamp paper.III. Section 8 Company( old Sec.25)According to Section-8 of Indian Companies Act, 1956 (Old section 25(1)(a) and (b) of the Indian Companies Act, 1956, a section-25) a section 8 company can be established ‘for promoting commerce, art, science, religion, charity or any other useful object’, provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members.Legislation : Section-8 companies are registered under section 8 of Indian Companies Act 2013 (old section-25 of the Indian Companies Act, 1956).Main Instrument : For a section-8 company, the main instrument is a Memorandum and articles of association (no stamp paper required)Board Members : A section-8 Company needs a minimum of three members; there is no upper limit to the number of members. The Board of Management is in the form of a Board of directors or managing committee.Application for Registration :An application has to be made for availability of name to the registrar of companies, which must be made in the prescribed form no. 1A, together with a fee. It is advisable to suggest a choice of three other names by which the company will be called, in case the first name which is proposed is not found acceptable by the registrar.2.Once the availability of name is confirmed, an application should be made in writing to the regional director of the company law board. The application should be accompanied by the following documents:Three printed or typewritten copies of the memorandum and articles of association of the proposed company, duly signed by all the promoters with full name, address and occupation.A declaration by an advocate or a chartered accountant that the memorandum and articles of association have been drawn up in conformity with the provisions of the Act and that all the requirements of the Act and the rules made thereunder have been duly complied with, in respect of registration or matters incidental or supplementary thereto.Three copies of a list of the names, addresses and occupations of the promoters (and where a firm is a promoter, of each partner in the firm), as well as of the members of the proposed board of directors, together with the names of companies, associations and other institutions in which such promoters, partners and members of the proposed board of directors are directors or hold responsible positions, if any, with description of the positions so held.A statement showing in detail the assets (with the estimated values thereof) and the liabilities of the association, as on the date of the application or within seven days of that date.An estimate of the future annual income and expenditure of the proposed company, specifying the sources of the income and the objects of the expenditure.A statement giving a brief description of the work, if any, already done by the association and of the work proposed to be done by it after registration, in pursuance of section-8.A statement specifying briefly the grounds on which the application is made.A declaration by each of the persons making the application that he/she is of sound mind, not an undischarged insolvent, not convicted by a court for any offence and does not stand disqualified under section 203 of the Companies Act 1956, for appointment as a director.3.The applicants must also furnish to the registrar of companies (of the state in which the registered office of the proposed company is to be, or is situate) a copy of the application and each of the other documents that had been filed before the regional director of the company law board.4.The applicants should also, within a week from the date of making the application to the regional director of the company law board, publish a notice in the prescribed manner at least once in a newspaper in a principal language of the district in which the registered office of the proposed company is to be situated or is situated and circulating in that district, and at least once in an English newspaper circulating in that district.5.The regional director may, after considering the objections, if any, received within 30 days from the date of publication of the notice in the newspapers, and after consulting any authority, department or ministry, as he may, in his discretion, decide, determine whether the licence should or should not be granted.6.The regional director may also direct the company to insert in its memorandum, or in its articles, or in both, such conditions of the licence as may be specified by him in this behalfNon profit Company under sec.8 of Indian Company Act 2013.IV. Special LicensingIn 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):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).To open an office and employ people, the NGO should be registered under the Shop and Establishment Act.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.A foreign non-profit setting up an office in India and wanting staff from abroad needs to be registered as a trust/society/company, needs permission from the Reserve Bank of India and also a No Objection Certificate from the Ministry of External Affairs.Comparison among Trust, Society and Non profit CompanyNGO Registration Methods - 21. Trust 2. Society, and 3. Non profit CompanyI. SummaryA. Types of Organizations:1. TrustsThe public charitable trust is a possible form of not-for-profit entity in India. Typically, public charitable trusts can be established for a number of purposes, including the relief of poverty, education, medical relief, provision of facilities for recreation, and any other object of general public utility. Indian public trusts are generally irrevocable. No national law governs public charitable trusts in India, although many states (particularly Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh) have Public Trusts Acts.2. SocietiesSocieties are membership organizations that may be registered for charitable purposes. Societies are usually managed by a governing council or a managing committee. Societies are governed by the Societies Registration Act 1860, which has been adapted by various states. Unlike trusts, societies may be dissolved.3. Section 8 CompaniesA section 8 company (old section 25 company) is a company with limited liability that may be formed for "promoting commerce, art, science, religion, charity or any other useful object," provided that no profits, if any, or other income derived through promoting the company's objects may be distributed in any form to its members.B. Tax LawsIndia ’s tax laws affecting NGOs are similar to the tax laws of other Commonwealth nations. These laws may have some impact on U.S. grantmakers, and thus are summarized here.India provides for exemption from corporate income taxes of the income of certain NGOs carrying out specific types of activities, with unrelated business income being subject to tax under certain circumstances.India also subjects certain sales of goods and services to VAT, with a fairly broad range of exempt activities. The rates range from 4 percent to 12 percent, with most goods and services taxed at 8 percent.The income tax law and the corporate tax law provide tax benefits for donors, and these may be relevant to an American corporation doing business in India in deciding whether to engage in direct corporate grantmaking in India. The existence of a double taxation treaty between India and the United States may also affect gift planning decisions of U.S. corporate grantmakers doing business in India.Finally, not-for-profit organizations involved in relief work and in the distribution of relief supplies to the needy are 100% exempt from Indian customs duty on the import of items such as food, medicine, clothing and blankets. Other exemptions may also be available.II. Applicable LawsConstitution of India Articles 19(1)(c) and 30;Income Tax Act, 1961;Public Trusts Acts of various states;Societies Registration Act, 1860;Indian Companies Act, 2013, section8;Foreign Contribution (Regulation) Act, 1976;Maharashtra Value AddedIII. Relevant Legal FormsThe right of all citizens to form associations or unions is guaranteed by the Constitution of India, Article 19(1)(c).There are three pertinent legal forms of not-for-profit entities under Indian law: trusts, societies, and section 8 companies (as well as cooperatives and trade unions, which, as mutual benefit organizations, are not discussed in this note). Many state and central government agencies have regulatory authority over these not-for-profit entities. For example, all not-for-profit organizations are required to file annual tax returns and audited account statements with various agencies. At the state level, these agencies include the Charity Commissioner (for trusts), the Registrar of Societies (referred to in some states by different titles, including the Registrar of Joint Stock Companies), and the Registrar of Companies (for section 25 companies). At the national or federal level, the regulatory bodies include the income tax department and Ministry of Home Affairs (only for not-for-profit organizations receiving foreign contributions).1. TrustsPublic charitable trusts, as distinguished from private trusts, are designed to benefit members of an uncertain and fluctuating class. In determining whether a trust is public or private, the key question is whether the class to be benefited constitutes a substantial segment of the public. There is no central law governing public charitable trusts, although most states have "Public Trusts Acts." Typically, a public charitable trust must register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) in order to be eligible to apply for tax-exemption.In general, trusts may register for one or more of the following purposes:Relief of Poverty or Distress;Education;Medical Relief;Provision for facilities for recreation or other leisure -time occupation (including assistance for such provision), if the facilities are provided in the interest of social welfare and public benefit; andThe advancement of any other object of general public utility, excluding purposes which relate exclusively to religious teaching or worship.At least two trustees are required to register a public charitable trust. In general, Indian citizens serve as trustees, although there is no prohibition against non-natural legal persons or foreigners serving in this capacity.Legal title of the property of a public charitable trust vests in the trustees. Trustees of a public charitable trust may not, however, in any way use trust property or their position for their own interest or private advantage. Trustees may not enter into agreements in which they may have a personal interest that conflicts or may possibly conflict with the interests of the beneficiaries of the trust (whose interests the trustees are bound to protect). Trustees may not delegate any of their duties, functions or powers to a co-trustee or any other person, except that trustees may delegate ministerial acts. In essence, trustees may not delegate authority with respect to duties requiring the exercise of discretion.Trustees of religious or charitable trusts are charged with discharging their duties with the degree of care that an ordinarily prudent person would exercise with respect to his personal property. This is a slight variant on the duty of care applicable in many U.S. jurisdictions, which requires directors and officers to act with the degree of diligence, care and skill that ordinarily prudent persons would exercise under similar circumstances in like positions (as opposed to in the management of their personal affairs). Public charitable trusts are highly regulated. For instance, in many states, purchases or sales of property by a trust must be approved in advance by the Charity Commissioner.Indian public charitable trusts are generally irrevocable. If a trust becomes inactive due to the negligence of its trustees, the Charity Commissioner may take steps to revive the trust. Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cy pres, meaning "as near as possible," may be applied to change the objects of the trust. Thus, it appears that grantors can feel fairly secure that the charitable nature of a trust will be honored, even if the original, specific purposes of the trust cannot be carried out.2. SocietiesSocieties are governed by the Societies Registration Act 1860, which is an all-India Act. Many states, however, have variants on the Act.Societies are similar in character to trusts, although there a few essential differences. While only two individuals are required to form a trust, a minimum of seven individuals are required to form a society. The applicants must register the society with the state Registrar of Societies having jurisdiction in order to be eligible to apply for tax-exempt status. A registration application includes the society's memorandum of association and rules and regulations. In general, Indian citizens serve as members of the managing committee or governing council of societies, although there is no prohibition in the Societies Registration Act against non-natural legal persons or foreigners serving in this capacity.According to section 20 of the Act, the types of societies that may be registered under the Act include, but are not limited to, the following:Charitable societies;Societies established for the promotion of science, literature, or the fine arts,For education; andPublic art museums and galleries, and certain other types of museums.The governance of societies also differs from that of trusts; societies are usually managed by a governing council or managing committee, whereas trusts are governed by their trustees.Individuals or institutions or both may be members of a society. The general body of members delegates the management of day-to-day affairs to the managing committee, which is usually elected by the membership. Members of the general body of the society have voting rights and can demand the submission of accounts and the annual report of the society for inspection. Members of the managing committee may hold office for such period of time as may be specified under the bylaws of the society.Societies, unlike trusts, must file annually, with the Register of Societies, a list of the names, addresses and occupations of their managing committee members. Furthermore, in a society, all property is held in the name of the society, whereas all of the property of a trust legally vests in the trustees.Unlike trusts, societies may be dissolved. Dissolution must be approved by at least three-fifths of the society's members. Upon dissolution, and after settlement of all debts and liabilities, the funds and property of the society may not be distributed among the members of the society. Rather, the remaining funds and property must be given or transferred to some other society, preferably one with similar objects as the dissolved entity.3. CompaniesThe Indian Companies Act, 2013, which principally governs for-profit entities, permits certain companies to obtain not-for-profit status as "section 8 companies." A section 8 company may be formed for "promoting commerce, art, science, religion, charity or any other useful object." A section 8 company must apply its profits, if any, or other income to the promotion of its objects, and may not pay a dividend to its members. At least three individuals are required to form a section 8 company. The founders or promoters of a section 8 company must submit application materials to the Regional Director of the Company Law Board. The application must include copies of the memorandum and articles of association of the proposed company, as well as a number of other documents, including a statement of assets and a brief description of the work proposed to be done upon registration.The internal governance of a section 8 company is similar to that of a society. It generally has members and is governed by directors or a managing committee or a governing council elected by its members.Like a society (but unlike a trust), a section 8 company may be dissolved. Upon dissolution and after settlement of all debts and liabilities, the funds and property of the company may not be distributed among the members of the company. Rather, the remaining funds and property must be given or transferred to some other section 8 company, preferably one having similar objects as the dissolved entity.Public Benefit StatusTo be eligible for tax-exemption under the Income Tax Act, 1961, a not-for-profit entity must be organized for religious or charitable purposes. Charitable purposes include "relief of the poor, education, medical relief and the advancement of any other object of general public utility."Public charitable trusts, by definition, must be created for the benefit of the public. Societies likewise may be registered for charitable purposes. Section 8 companies are formed for the limited purposes of "promoting commerce, art, science, religion, charity or any other useful object."IV. Specific Questions Regarding Local LawThe following discussion addresses the extent to which Indian not-for-profit entities satisfy the requirements for a charitable equivalency determination under section 501(c)(3) of the U.S. Internal Revenue Code of 1986, as amended (hereinafter the "Code"). The discussion is limited to the minimum requirements under Indian law; the governing documents of charitable entities may of course choose to include further provisions, which may satisfy the requirements of an equivalency determination. U.S. private foundation donors should, therefore, also review a potential grantee's governing documents for provisions relevant to an equivalency determination.A. InurementPublic charitable trusts must benefit a large class of beneficiaries and must be for the public benefit. Moreover, trustees of public charitable trusts may not engage in self-dealing. Despite the clear charitable intent of a public charitable trust, absent a provision in the trust deed specifically prohibiting private inurement, it is unclear whether public charitable trusts satisfy the prohibition on private inurement in Code section 501(c)(3).The Societies Registration Act 1860 does not prohibit the inurement of any earnings of the society to any private shareholder or individual.The Indian Companies Act, 2013, section 8 specifically provides that no profits, if any, or other income may be distributed by way of dividends to its members.B. Proprietary InterestWhether an individual may have a proprietary interest in a not-for-profit entity relates to the issue of inurement. Trustees of a public charitable trust hold trust assets on behalf of the trust. Thus, although trustees have legal title to the trust's assets, they hold these assets for the beneficiaries of the trust, not for themselves. Members of the managing committee or governing council of a society or section 8 company hold the assets of a society or section 8 company.C. DissolutionIndian public charitable trusts are generally irrevocable. If a trust becomes inactive due to the negligence of its trustees, the Charity Commissioner may take steps to revive the trust. Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cy pres, meaning "as near as possible," may be applied to change the objects of the trust. Thus, it appears donors could feel fairly secure in the event the trust can no longer accomplish its initial purposes; the trust's purposes would be changed to another similar public charitable purpose, or in the unlikely event of a distribution or winding up of a trust due to changed circumstances, the trust assets would be used for similar charitable purposes.Unlike trusts, societies and section 8 companies may be dissolved. Upon dissolution and after settlement of all debts and liabilities, the funds and property of the society or company may not be distributed among the members. Instead, the remaining funds and property must be given or transferred to some other society or section 8 company, preferably one with similar objects.D. ActivitiesEconomic ActivitiesThere are no restrictions on Indian NPOs’ business/commercial/economic activities. However, the profits must be applied fully towards charitable objects. If this is not done, then the NPO will lose its income tax exemption and its income will be liable to tax at the maximum marginal rate (35.1%). Further the NPO must maintain separate books of account for the business/commercial/economic activities. [Income Tax Act, 1961 (seventh proviso to section 10(23C); section 11, subsection 4 and 4A)].Investment ActivitiesState and national laws limit the types of investments Indian not-for-profit organizations may make. For example, Indian not-for-profit organizations may not invest in shares of public or private limited companies. Furthermore, not-for-profit organizations registered in India may not invest abroad.E. Political ActivitiesNot-for-profit organizations in India may not engage in political campaign activities or legislative activities. Indian not-for-profit entities may "lobby" for non-political causes, however, provided that such activity promotes the "general public utility" and is incidental to the attainment of the charity's objects.F. DiscriminationArticle 30 of the Constitution of India gives all "minorities," whether based on religion or language, the right to establish and administer educational institutions of their choice. "Minority" is defined as those groups that wish to preserve stable ethnic, religious or linguistic traditions or characteristics markedly different from those of the rest of the population. Accordingly, special inquiry should be made when donors are considering providing grants to educational institutions.G. Control of OrganizationWith regard to charities in general, trustees are expected to be independent. It is, however, ordinarily possible for another legal person to influence the selection of directors, officers, or trustees – for example, by making a donation contingent on the donor's right to appoint a member of the board.A for-profit company that creates a public charitable trust can exert more direct control. The for-profit company could, in the process of founding the public charitable trust, reserve the authority to appoint and remove trustees and to influence major policy decisions. This is typical of a form of public charitable trust known as a "corporate foundation," which is essentially controlled by its for-profit founder, or "settlor."In the case of a Section 8 company or a society, members always have the right to remove directors and thus to influence policy. These members can include for-profit entities.Therefore, it is possible that an Indian charity may be controlled, perhaps indirectly, by a for-profit entity (which will lead to additional IRS scrutiny) or by an American grantor charity (which requires that the charity specifically so provide in the affidavit).V. Tax LawsA. Tax Exemptions1. General SchemeThe Income Tax Act, 1961, which is a national all-India Act, governs tax exemption of not-for-profit entities. Organizations may qualify for tax-exempt status if the following conditions are met:The organization must be organized for religious or charitable purposes;The organization must spend 85% of its income in any financial year (April 1st to March 31st) on the objects of the organization. The organization has until 12 months following the end of the financial year to comply with this requirement. Surplus income may be accumulated for specific projects for a period ranging from 1 to 5 years;The funds of the organization must be deposited as specified in section 11(5) of the Income Tax Act;No part of the income or property of the organization may be used or applied directly or indirectly for the benefit of the founder, trustee, relative of the founder or trustee or a person who has contributed in excess of Rs. 50,000 to the organization in a financial year;The organization must timely file its annual income return; andThe income must be applied or accumulated in India. However, trust income may be applied outside India to promote international causes in which India has an interest, without being subject to income tax.2. Corpus DonationsCorpus donations or donations to endowment are capital contributions and should not be included to compute the total income of the organization.3. Business IncomeUnder amendments to Section 11(4A) of the Income Tax Act 1961, a not-for-profit organization is not taxed on income from a business that it operates that is incidental to the attainment of the objects of the not-for-profit organization, provided the entity maintains separate books and accounts with respect to the business. Furthermore, certain activities resulting in profit, such as renting out auditoriums, are not treated as income from a business.4. Disqualification from ExemptionThe following groups are ineligible for tax exemption: all private religious trusts; and charitable trusts or organizations created after April 1, 1962, and established for the benefit of any particular religious community or caste. But note that a trust or organization established for the benefit of "Scheduled Castes, backward classes, Scheduled Tribes or women and children" is an exception; such a trust or organization is not disqualified, and its income is exempt from taxation.B. Value Added TaxIndia subjects certain sales of goods and services to VAT, with a fairly broad range of exempt activities. The rates range from 4 percent to 12 percent, with most goods and services taxed at 8 percent.An entity (including a public charitable trust) is liable under the VAT Act if its sales/purchase turnover in the previous year exceeded Rs.500,000. The threshold is lower, Rs.100,000, for importers.Several other tax laws have now merged into VAT, including Sales Tax Act, Motor Spirit Taxation Act, Purchase Tax on Sugarcane Act, and Transfer of Right to Use Act.C. Tax Deduction for DonorsThe Income Tax Act, section 80G, sets forth the types of donations that are tax-deductible. The Act permits donors to deduct contributions to trusts, societies and section 8 companies. Many institutions listed under 80G are government-related; donors are entitled to a 100% deduction for donations to some of these government funds. Donors are generally entitled to a 50% deduction for donations to non-governmental charities. Total deductions taken may not exceed 10% of the donor's total gross income.The following are examples of governmental charities listed in section 80G, contributions to which entitle the donor to a 100% deduction: the Prime Minister's National Relief Fund; the Prime Minister's Armenia Earthquake Relief Fund; the Africa (Public Contributions – India) Fund; and the National Foundation for Communal Harmony.As to those entities not specifically enumerated in section 80G, donors may deduct 50% of their contributions to such organizations, provided the following conditions are met:the institution or fund was created for charitable purposes in India;the institution or fund is tax-exempt;the institution's governing documents do not permit the use of income or assets for any purpose other than a charitable purpose;the institution or fund is not expressed to be for the benefit of any particular religious community or caste; andthe institution or fund maintains regular accounts of its receipts and expenditure.Note that donations to institutions or funds "for the benefit of any particular religious community or caste" are not tax-deductible. A not-for-profit organization created exclusively for the benefit of a particular religious community or caste may, however, create a separate fund for the benefit of "Scheduled castes, backward classes, Scheduled Tribes or women and children." Donations to these funds may qualify for deduction under section 80G, even though the organization, as a whole, may be for the exclusive benefit of only a particular religious community or caste. The organization must maintain a separate account of the monies received and disbursed through such a fund.In-kind donations are not tax-deductible under Section 80G. Receipts issued to donors by not-for-profit organizations must bear the number and date of the 80G certificate and indicate the period for which the certificate is valid.The Income Tax Act contains a number of other provisions permitting donors to deduct contributions. Under section 35AC of the Act, donors may deduct 100% of contributions to various projects, including 1) construction and maintenance of drinking water projects in rural areas and in urban slums; 2) construction of dwelling units for the economically disadvantaged; and 3) construction of school buildings, primarily for economically disadvantaged children. Furthermore, under section 35CCA of the Act, donors may deduct 100% of their contributions to associations and institutions carrying out rural development programs and, under Section 35CCB of the Act, 100% of their donations to associations and institutions carrying out programs of conservation of natural resources. A weighted deduction of 125% is also allowed for contributions to organizations approved under section 35(1)(ii) (a scientific research institute or a university, college or other institution) specifically for "scientific research," and for contributions made under section 35(1)(iii) specifically for "research in social science or statistical research."D. Reporting Foreign ContributionsUnder the Foreign Contribution (Regulation) Act, (FCRA), all not-for-profit organizations in India (e.g., public charitable trusts, societies and section 8 companies) wishing to accept foreign contributions must a) register with the Central Government; and b) agree to accept contributions through designated banks. Furthermore, not-for-profit entities must report to the Central Government regarding foreign contributions received, within 30 days of their receipt, and must file annual reports with the Home Ministry. The entity must report the amount of the foreign contribution, its source, the manner in which it was received, the purpose for which it was intended, and the manner in which it was used. Foreign contributions include currency, securities, and articles, except personal gifts under Rs. 1,000 (approximately $20). Funds collected by an Indian citizen in a foreign country on behalf of a not-for-profit entity registered in India are considered foreign contributions. Moreover, funds received in India, in Indian currency, if from a foreign source, are considered foreign contributions.According to FCRA guidelines if 50% or more of the “office bearers” (not members of the board of management) of a trust/society or section 8 Company change, the organization must apply to the Home Ministry for approving the change. This approval could take as long as three to four months.However, in the interim period, the FC(R)A registration granted to the organization would stand “suspended”.FC(R)A guidelines require that an organization allowed to receive funds from a foreign source, may provide funds from its FC(R)A account to another organization, only if the other organization also has clearance from the Home Ministry to receive funds from a foreign source.If the foreign donor agency specifies in writing that the whole or part of the grant may be taken to “corpus”, the recipient organization may do so. Such corpus fund may be invested in an approved security.The “interest” or “dividend” generated should be accounted for as amount received by way of interest on deposit drawn out of funds received from a foreign source.In other words, even the interest/dividend received in India in Indian rupees must be disclosed in the Return Form FC-3.E. Customs DutyNot-for-profit organizations involved in relief work and in the distribution of relief supplies to the needy are 100% exempt from customs duty on the import of items such as food, medicine, clothing and blankets. Moreover, other exemptions may be available, such as an exemption from customs duty for scientific/technical equipment and components intended for research institutes. Donors should investigate whether an exemption from customs duty is available before shipping articles to not-for-profit entities in India.F. Double Tax TreatyIndia and the United States signed a double-tax treaty on September 12, 1989. The treaty does not address issues related to charitable giving or not-for-profit entities.Hope you find solution from this Details….Regards,AJ