In India non profit / public charitable organizations can be registered as trusts, societies, or a private limited non profit company, under section-25 companies. Non-profit organizations in India (a) exist separately 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, usually outside the membership of the organization; 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 completely to worship is not considered as charitable. Therefore, in ascertaining whether a purpose is private or public, 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.
Whether a trust, section-25 company or society, the Income Tax Act gives all categories equal treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-profit organizations may claim a repayment against donations made.
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