In the world of nonprofit organizations, gaining recognition and support is crucial for fulfilling their mission and sustaining their activities. One way that charitable organizations can bolster their credibility and enhance their fundraising efforts is by obtaining registration under sections 80G and 12A of the Income Tax Act, 1961. These registrations not only provide a nonprofit with legal standing but also offer tax advantages that encourage public support.
What is Section 12A?
Section 12A of the Income Tax Act is the foundation for ensuring that a charitable organization is considered a “charitable trust” under Indian law. This registration grants the organization exemption from paying income tax on its income.
What is Section 80G?
Section 80G, provides tax deductions to donors who contribute to a registered charitable organization. This provision is a powerful tool for encouraging donations. When an NGO is granted registration under 80G, donors can claim a deduction of up to 50% (or 100% in some cases) of the amount they donate, thereby reducing their taxable income.
Conclusion
Achieving 80G and 12A registration is a vital step for any nonprofit organization in India that aims to expand its impact, enhance donor trust, and improve financial sustainability. These registrations not only provide tax benefits but also elevate the NGO’s legitimacy in the eyes of the public and potential funding partners.
Celebrating Official Recognition: 80G & 12A Registration Fully Approved!!
We are thrilled to announce that our organization has successfully received 80G and 12A registration under the Income Tax Act!
The final approval of our 80G and 12A registration marks a pivotal moment in our journey, reaffirming our commitment to transparency, accountability, and charitable service. This achievement not only enhances our credibility but also empowers us to further our mission with greater strength and reach.
This milestone is a huge step forward for us, as it not only strengthens our credibility but also open up new opportunities for growth and impact such as following:
Tax Exemption for our NGOs
Tax Benefits for Donors
Enhanced greater Credibility and Trust
Opening Doors to Grants & Funding
We are deeply grateful to our supporters, partners, and well-wishers for their unwavering belief in our cause & would like to express our gratitude, as this achievement strengthens our ability to create a lasting impact. As we continue to work towards making a meaningful impact, this milestone serves as a reminder that with the right foundation, we can achieve extraordinary things together. Here’s to a future filled with purpose, growth, and lasting change, we look forward to continuing our mission with renewed focus and commitment.
Feel free to connect at +91-9599561517 for more query
The concept of Limited Liability Partnership (LLP) has become increasingly popular among businesses in India, proposing a flexibility, limited liability, and operational efficiency. LLPs are an outstanding choice for small to medium-sized businesses, start-ups, and even professionals who want to operate under a healthy legal structure. If you are considering to start a business in LLP, here are important things to know about LLP
What is LLP and its importance?
A limited liability partnership is a partnership in which some or all partners have limited liabilities. It therefore can reveal aspects of both partnerships and corporations. In an LLP, each partner is not responsible or liable for another partner’s misconduct or negligence.
LLPs have become popular among entrepreneurs in various industries because they shield partners’ assets and have more upfront regulatory requirements than traditional corporations. The concept of LLP was introduced in India in 2008 and is governed by the Limited Liability Partnership Act.
Pre-requisites for LLP
To qualify for the LLP company registration in India, you must follow to the subsequent criteria:
Minimum of Two Partners: Establishing a Limited Liability Partnership in India necessitates a minimum of two partners, with no upper limit threshold on the maximum number of partners.
Designated Partners: Within the partnership framework, there should be at least two selected partners are obligatory, and they must be natural individuals. At least one of these designated partners must also maintain residency in India for an LLP incorporation.
Agreed Contribution: Each partner is required to contribute the shared capital of the LLP, as specified and agreed upon.
Indian Resident Designated Partner: At least one designated partner of the LLP must hold a resident status in India.
What are the advantages of a LLP in business?
Some advantages of Limited Liability Partnership (LLP) include:
Separate legal entity: Having a separate identity, LLP can practice certain benefits like owning property, entering contracts, likable in legal proceedings, etc independently.
Limited liability of the partners: With limited liability, partners are not responsible for the LLP‘s debts and obligations. It is limited to only paying the contributions agreed upon to protect their assets.
Low cost and less compliance: LLP is a low-cost enterprise in comparison to any corporation. With less regulatory and compliance requirements an LLP is easier to manage.
Minimum capital contribution: There is no requirement to have a minimum capital before forming an LLP. It can be formed with any amount of capital contributed by the partners.
Pass-Through Taxation: LLP does not need to pay an income tax. The structure saves tax as the partners are not taxed extra as in a corporation.
The key differences between an LLP and Partnership
Aspect
LLP (Limited Liability Partnership)
Partnership
Liability
Partners have limited liability, protecting personal assets.
Partners have unlimited liability, meaning personal assets can be used to settle debts.
Legal Status
Separate legal entity from its partners.
Not a separate legal entity; partners are personally liable.
Registration
Must be registered with the government.
No formal registration is required
Management
Managed by all designated partners.
All partners generally manage the business.
Number of Partners
Minimum of 2, no upper limit.
Minimum of 2, typically no upper limit.
Transfer of Ownership
Ownership can be transferred, but requires consent from other partners.
Ownership transfer is often difficult and may require the agreement of all partners.
Continuity
LLP has perpetual succession, continues even if a partner leaves or dies.
Partnership dissolves upon the death or exit of a partner, unless agreed otherwise.
Which One is Better ?
LLP is generally considered better for businesses looking for limited liability protection, perpetual succession, and a more formal structure. It is seamless for professionals (lawyers, accountants, etc.) or businesses that want limited liability without the difficulty of a corporation.
Limited liabilityIs not agent of partnershipNo fiduciary duty and duty of care
Unlimited liabilityIs agent of partnershipHas fiduciary duty and duty of care
Identification Documents for LLP Registration:
LLP can assess funds through:
How to Register an LLP in India?
Compliances after LLP Incorporation
S.No
Form Name
Due Date
Purpose
1
Form 8 (Statement of Accounts & Solvency)
30th October (Annually)
To file annual financial statements and a declaration of solvency.
2
Form 11 (Annual Return)
30th May (Annually)
To file the annual return with details of partners, business activities, etc.
3
Form 3 (LLP agreement)
At the time of incorporation
To file the LLP agreement document.
4
Form 4 (Notice of Partnership/Change in Designated Partners)
Within 30 days of change
To inform any changes in the designated partners.
5
Form 12 (Application for Conversion)
If converting from partnership to LLP
To convert a partnership into an LLP.
6
Form DIR-3 (Director Identification Number)
Before appointment of partners (if applicable)
To obtain a director identification number for partners.
7
Form 24 (Change in LLP Agreement)
Within 30 days of change
To file changes made in the LLP agreement.
8
Income Tax Return (ITR-5)
31st July (Annually)
To file the income tax return for the LLP.
9
GST Return (GSTR-1, GSTR-3B)
Monthly or Quarterly
To file GST returns if the LLP is GST registered
Registration of LLP in Past months
Based on the analysis, it can be concluded that, on average, 5,000 LLP (Limited Liability Partnership) companies are being registered every month. This consistent growth in registrations indicates a steady trend in the formation of LLPs, suggesting an increasing confidence in this business structure as a preferred choice for entrepreneurs and businesses.
Conclusion
The Registration process of LLP in India is an essential step for businesses looking to enjoy the benefits of a traditional partnership structure with benefits like limited liability protection, legal recognition, and flexibility in conducting operations. Registering an LLP not only provides legal identity to the business, but also opens doors to easy funding, credit, and business opportunities. Therefore, understanding ‘how to register an LLP’ or following the procedure for Registration of LLP is critical for all aspiring entrepreneurs looking forward to establishing their start-ups in India.
Frequently asked questions
Q1. How is an LLP different from a traditional partnership?
Unlike a traditional partnership, in an LLP, individual partners are not personally liable for the debts and liabilities of the business. This limited liability protection is a crucial feature distinguishing LLPs from general partnerships.
Q2. Can a single person form an LLP?
No, an LLP requires a minimum of two partners. However, there is no maximum limit on the number of partners an LLP can have.
Q3. Are LLPs only suitable for certain types of businesses?
LLPs are multipurpose and can be suitable for various businesses, including professional services, consultancy, and small to medium-sized enterprises. Legal and accounting firms commonly choose.
Q4. How are profits and losses distributed in an LLP?
Profits and losses in an LLP are typically distributed among the partners based on the terms outlined in the LLP agreement. This agreement may specify a fixed ratio, percentage, or other distribution method.
Q5. Can partners in an LLP be held personally responsible for the actions of other partners?
In general, partners in an LLP are not personally liable for the actions or debts of other partners. Each partner’s liability is limited to their investment in the business.
Q6. Are there annual compliance requirements for LLPs?
Yes, LLPs are typically required to satisfy annual compliance requirements, which may include filing annual returns, maintaining proper accounting records, and complying with tax regulations.
Q7. Can an LLP be converted into another business structure?
In some jurisdictions, an LLP can be converted into a different business structure, such as a private limited company. The process and requirements for adaptation vary by jurisdiction.
Q8. Can foreign nationals be partners in an LLP?
Yes, many jurisdictions allow foreign nationals to be partners in an LLP. However, specific rules and regulations may vary, and it’s suitable to check the jurisdiction requirements in which the LLP is being formed.
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