Receiving funds from organizations into Sec 8 company

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This query is : Resolved

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A Section 8 company is seeking advice on how to receive funds from stakeholders like companies, societies, trusts, and individuals. They are unsure whether to accept these as donations or in another format, and what documentation is required for their protection. The discussion touches upon the implications of not being 12A registered and potential tax liabilities on received funds.

Jack Gedreven

Jack Gedreven (Querist)
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30 October 2020 We are a Section 8 Company and are planning on receiving funds from stakeholders (companies, societies, trusts, individuals) since our activities will benefit them. Should we receive them as donations or in some other prescribed format? Also, what document(s) should we demand along with the check (resolution etc) for our safeguard? Will appreciate if the format could be shared too.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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30 October 2020 Receive it as donation if you are 12A registered charitable company. Cheque with covering letter is enough for donation to charitable activities.

Jack Gedreven

Jack Gedreven (Querist)
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30 October 2020 We are not 12A registered and are not even planning to get one anytime soon. We heard that there are limitations to how much a company could donate (not sure if the same applies to individuals and or societies, trusts etc).. hence we were concerned about simply accepting the funds.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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31 October 2020 Limitations applicable to all it's not your concern but tax payable on all'such receipts.

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