1. Non-Profit Mandate

• Cannot engage in commercial trade for profit distribution
• All surplus income must be reinvested in charitable objectives

2. Restricted Revenue-Generating Activities

• Permitted to earn income only through:
  • Donations & grants
  • Membership fees
  • Service charges (limited to cost recovery)
• Prohibited from:
  • Share trading
  • Speculative investments
  • High-profit commercial ventures

3. Asset Utilization Restrictions

• Assets cannot be distributed to members/directors
• Property must be used exclusively for charitable purposes
• Sale of assets requires regulatory approval

4. Compliance Requirements

• Must maintain separate books for business/non-business income
• Required to spend 85% of income annually (Section 11, IT Act)
• Penalties for violating non-profit conditions

5. Governance Constraints

• No dividend payments allowed
• Salary to members/directors must be reasonable (not profit-linked)
• Strict MCA & Income Tax reporting obligations