The creation of a foundation in India falls under several laws, among which the most important is Section 8 of the Company Act which provides for the establishment of non-profit entities. However, other legislation must also be respected.
If you want to set up a foundation, you can rely on our company formation agents in India, who can help you comply with the complex legislation of this type of entity.
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The main forms a foundation can take in India
There are several ways to open a foundation in India, as follows:
- the registration of a Section 8 company;
- the establishment of a trust (for charitable purposes);
- the creation of a society.
The main differences between them reside in the authorities to register them with and the settlement documents.
Our company registration consultants in India can assist in setting up a foundation under the desired form.
Steps to set up an Indian foundation
Here are the general steps to open a foundation in India:
- choosing and reserving a name (specific requirements must be observed based on the structure chosen);
- drafting the creation document (trust deed/Memorandum and Articles of Association);
- paying the registration fees, no matter the chosen form;
- registering the foundation with the appropriate authority.
A local address must also be declared upon registration.
Special registration requirements apply when the Indian foundation is incorporated under Section 8 of the Company Law. Specifically:
- at least one of the members (the one representing the foundation in the relation with the authorities) must obtain a Digital Signature Certificate;
- the name of the foundation must have appended one of the following designations: federation, foundation, chamber, forum, association, council, or confederation;
- following registration with the Companies House, the foundation must also register with the Ministry of Corporate Affairs.
Our India company formation specialists can assist with the preparation of the necessary documents and the registration of the foundation with the relevant authorities, based on the chosen structure.
Must foundations register for taxation in India?
Considering a foundation is bound to complete non-profit activities, one might be inclined to consider that it does not need to register for taxation. However, certain activities of such entities may result in the payment of certain taxes, such as the GST. For this purpose, the Indian foundation must register for taxation. Additionally, they are also subject to financial compliance requirements, even when obtaining the tax benefits they are entitled to.
Our accountants in India are at your service to ensure that after opening a foundation, you comply with the tax regulations applicable to such entities.
Tax benefits for Indian foundations
Setting up a foundation in India comes with various tax advantages, no matter the form it takes. Among them, we mention the following:
- when registered as a society, the foundation is exempt from the income tax;
- when created under Section 8, the foundation falls under Section 80G of the Income Tax Act and 1961 Exemption of Stamp duty for registration.
Charity activities in India
The charities sector in India is divided into activities carried out by the government and by private companies and associations. According to data gathered by this organization:
- in 2024, there were more than 3.3 million non-profit organizations registered in India;
- according to another publication, last year, there were also 15,958 active associations in India;
- India also had 203 private high-net worth individuals donating to social causes.
If you want to open a foundation in India and need support, please contact us.