28 February 2016
Problem Statement : We are planning an application that help Orphanage to get fund from public. For online transaction (payment gateway) to enable there should be merchant id. For this bank do have charges. To support Orphanage which cannot bear this fund, we though to create a Merchant Id and accept transfer to our account. Then monthly transfer it to Orphanage's account. We registered as a Pvt Ltd company. Will there be any legal issue to do our business like this? We are not planning to take any revenue or commission for this.
28 February 2016
well. first of all, you should have registered as a section 8 company online with GiveIndia. Secondly, as a private limited, whatever you will receive will become your income, so you will have to worry about service tax implications. `And what you mean by the orphanage cannot bear the expense. The expenses are deductible from the donations. So it is not that the orphanage has to bear the cost out of its own pocket. thirdly, how would you fund the merchant expenses if you don't have any other income? won't you deduct the charges from the amounts receive and transfer net to the orphanage?
So either you structure the orphanage to have a merchant ID (many NGOs do have that) or register yourself as Section 8 company
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