NGO Registration – An Overview
Non-Governmental Organizations (NGOs) play a critical role in advocating the cause of society and the underprivileged. However, fostering change involves a legal framework that begins with registration at its core. NGO Registration is the first step in the journey to make a societal impact through philanthropy. It enables credibility, encourages transparency, and facilitates various benefits, including tax exemptions. NGOs in India can be registered under multiple legal frameworks – Trusts, Societies or Section 8 Companies.
What is an NGO?
An NGO is a non-profit organisation founded by a group of people with a shared goal in philanthropy and social service. An NGO covers a wide gamut of charitable services across art, science, sports, education, research, social welfare, religion, charity, environment, sustainability, etc. An NGO uses all its earnings and funds to fulfil its non-profitable objectives.
Types of NGO Registrations in India
Non-government organizations can be registered through three legal routes. The three significant types of NGO registration in India are as follows:
1- Trust
The process of legally establishing a trust is known as Trust Registration. Trust is one of the three types of non-profit organisations (NPO) created to serve specific causes like healthcare, community development and education. Trust registration is regulated by the Indian Trusts Act, 1882, and legal experts and professionals manage the process.
2- Society
Society registration is the process of founding a society under the Societies Registration Act, 1860. A society is a group of people united by a shared purpose. Societies advocate and promote charity, religion, education, science, literature, and social service.
3- Section 8 Company
Section 8 Company is another type of non-profit organisation registered under Section 8 of the Companies Act, 2013. Section 8 The Company’s goal is to promote commerce, art, science, religion, charity or any other objective for the greater good of society. A Section 8 Company, under no circumstances, functions with the aim of earning profits.
Classifications of NGOs in India
NGOs are generally organizations that function independently. In India, NGOs can be classified on the basis of their orientation and level of operation:
1- By the Level of Orientation
2- By the Level of Operation
NGO Registration Requirements
The requirements for NGO registration entail processes and documents required for types of NGO registration.
1. Trust Registration
Process
Documents Required
2. Society Registration
Process
Documents Required
3. Section 8 Company Registration
Process
Documents Required
Trust vs Society vs Section 8 Company – Brief Understanding
The tabular representation of the difference between Trust, Society, and Section 8 Company is given below.
|
CRITERIA |
TRUST |
SOCIETY |
SECTION 8 COMPANY |
|
Legal Framework |
Indian Trust Act of 1882 |
Societies Registration Act, 1860 |
Companies Act, 2013 |
|
Main Objective |
Charity |
Community Welfare |
Promote charity, education, science, art, etc. |
|
Membership |
Trustees |
Members |
Shareholders |
|
Governing Body |
Board of Trustees |
Governing Council |
Board of Directors |
|
Governing Rules |
Trust Deed |
Memorandum & By-Laws |
Memorandum & Articles of Association |
|
Registration Authority |
Registrar of Trust |
Registrar of Societies |
Registrar of Companies (ROC) |
|
Tax Exemption |
Section 12A & 80G |
Section 12A & 80G |
Section 8(1) & 12A |
What is the Need for NGO Registration in India?
Running an NGO after getting it registered is a smart decision. NGO registration is required for the following reasons:
- Establish Credibility for fundraising, donations, collaborations and support.
- Facilitate visibility, which in turn paves for its growth through community impact.
- Attract volunteers to fund its operations by offering income tax exemptions to donors.
- Avail Tax Benefits under the Income Tax Act of 2013, leading to financial sustainability.
- Facilitate Asset and Liability Management under the ITR Filing Return Act of 1961 for selling assets and earning interests.
- Reduce Tax Obligations under the ITR Act of 2013 via stamp duty exemption.
Laws Applicable to NGOs in India
In accordance with the type of registration, all NGOs have to abide by the following laws in India:
- Trusts - Indian Trusts Act, 1982
- Society – Societies Registration Act, 1860
- Section 8 Company – Section 8 Companies Act, 2013
What are the Benefits of NGO Registration in India?
NGO registration builds your value and enhances credibility in the eyes of stakeholders. The significant benefits of NGO registration in India are as follows:
- Legal Recognition - Validates its existence and boosts its identity as a separate entity from that of its members, strengthening legitimacy for stakeholders.
- Financial Assistance & Fundraising – Donations from individual donors and other stakeholders such as corporates and governments made easy, lending legitimacy to the donations received.
- Asset Procurement - Facilitates real estate buying, selling and retaining fixed assets.
- Ownership Transfer - NGOs registered under the Companies Act of 2013 are legally permitted to transfer ownership or rights to interest accumulated under the Income Tax Act of 1961.
- Safeguarding Legal Rights – Adds value to the NGO as a business/corporate entity, boosting operational transparency and giving it a legal right to safeguard the entity’s and trustees’ interests.
- Operational Continuation - An NGO functions indefinitely, even in case of its founders' or trustees' death or resignation. In India, it shuts down only if there is a court decree or it has declared closure.
- Name Protection – Using a name or identity similar to a registered NGO is forbidden. They have the right to safeguard their legal name and protect their identity and brand.
- Protection Against Personal Liability –Acquiring assets and interests under a registered NGO effectively shields a person from personal events like foreclosure, divorce or bankruptcy.
- Bank Account for Stakeholder Confidence- Opening a bank account mandates that an NGO register itself. Stakeholders and donors are more confident and comfortable donating to a corporate account than to a personal account.
- Promotes Accountability & Transparency – Considered to have responsible leadership, promote accountability & transparency and share stakeholder confidence. It paves the way for corporate collaborations and donations from governments, individuals, political parties, charities, financial institutions, etc.
- Organized Financial Strategy – NGOs offer a tax-free framework as they’re exempted from taxation. It is, therefore, easy to create a financial strategy facilitating tax-free operations.
- No Minimum Share Capital Requirement –Registered NGOs are exempt from the hassle of minimum share capital requirements to meet their operational needs. Such NGOs can freely fund their operations through donations received.
- Access to Credit – Access to securing loans from financial institutions or lenders to fund daily operational needs, manage mortgages, and buy and sell fixed assets and/or lands. Unregistered NGOs find it hard to secure loans from banking institutions.
How to Raise Funds for an NGO?
NGOs can raise funds through different means, such as:
- Individual Donors – NGOs can appeal to donors through personal contacts for small individual contributions.
- Crowdfunding – NGOs can collect small contributions from a large number of individuals through crowdfunding platforms/portals available online.
- Grants – NGOs can apply for grants from government and private organisations, foundations and international organisations that are active in the field of social service.
- Corporate Collabs & Partnerships – NGOs can collaborate and partner with professional & corporate organisations that are aligned with their vision and goals.
- Fundraisers - NGOs can organise fundraising events like charity walks, concerts, auctions, or online campaigns to entice donors and generate funds.
- Social Media Platforms – NGOs can leverage social media platforms like Facebook, Instagram, Twitter, and LinkedIn to connect with a broad audience and raise awareness about their cause.
What is the Eligibility Criteria to start an NGO in India?
To start and run a Ngo successfully in India, it’s essential to understand the eligibility criteria first. The eligibility criteria to initiate the NGO registration process in India:
- Private Limited Companies – Need at least two directors. Maximum number of directions permitted is 200.
- Public Limited Companies – Need at least three directors. There is no prescribed limit for maximum number of directors.
- NGOs - Registration fee not required.
Online NGO Registration Forms
There are several NGO registration forms that you might not be aware of. The forms required to register an NGO in India:
What is the Procedure for NGO Registration in India?
The NGO registration process is free from complexities and easy to comprehend. The procedure to register an NGO in India is as follows:
Step 1
Identify the Type—Based on its goals and objectives, identify the NGO type and choose one of the following: trust, society, or section 8 company.
Step 2
Pick an Exclusive Name – Pick an exclusive name (not similar to any existing NGO) for your NGO reflecting its mission, goals and existence.
Step 3
Draft the Memorandum of Association (MoA) & Articles of Association (AoA)
Draft the MoA and AoA outlining its goals, guidelines, regulations and policies to govern its operations and management. File form DIR-3 with ROC to obtain DIN.
Step 4
Form the Governing Body- Form a governing body or managing committee consisting of people responsible for the organization's operations and decision-making processes.
Step 5
Furnish a Registered Office Address – Furnish a registered office address for official communication and delivery of legal documents and paperwork.
Step 6
Compile Necessary Documentation – Compile important documents, including identity proofs, address proofs, and photographs of all members of the governing council.
Step 7
Submit the Registration Application -Submit the registration application with attached documents, to the relevant authority depending on the type of the NGO - Registrar of Societies, Registrar of Trusts, or Registrar of Companies.
Step 8
Review and Approval: The registration authority will assess the application and all supporting documents. You may be asked to provide additional information or clarification, depending on the review.
Step 9
Acquire the Registration Certificate—After successfully reviewing the application and supporting documents, the registration authority will issue a certificate validating the NGO's legal status.
Step 10
Request for Tax Exemptions – Once the registration certificate is acquired, the NGO is eligible to apply for tax exemptions under the Income Tax Act. However, it must have obtained certifications such as 12A and 80G prior to the steps mentioned above.
Step 11
Adhere to Compliance and Reporting: Compliance with legal requirements is a must, and it includes filing yearly returns, maintaining accounts, and presenting audited financial statements.
What is the NGO Registration Fees?
The registration fees for NGOs depends on the following factors:
- Type of the NGO registered – Trust, Society or Section 8 Company.
- Country in, which the NGO is being registered
- Requirements of the governing body
- Additional expenses incurred due to – documentation, legal compliance, administrative charges and regulatory requirements
The break-up of the total amount is as follows:
|
NGO Registration Service |
Registration Fees |
|
Digital Signature Certificate Fees |
INR 2000 |
|
Government Fees (Stamp Duty) |
INR 1,500 |
|
Professional Fees |
INR 3,799 |
|
Total Cost |
INR 7,299 |
NGO Registration - Timeline
The time taken to register an NGO in India depends on various factors including verification by the departments and the type of NGO:
- Trust – Takes up to 20 working days to register a trust.
- Society – Takes up to 25 working days to register a society.
- Section 8 Company – Takes between 10-14 working days to register a section 8 company.
NGO Registration Package by Corpbiz
Why Corpbiz?
Corpbiz is a customer-centric organisation with a team of professional experts with vast experience in NGO Registration. We offer end-to-end customer support, guidance and doubt clarity for our clients in helping them realise their dreams of serving the society through NGO Registration.
Frequently Asked Questions
An NGO is the acronym for Non-Governmental Organization. NGOs in India are not-for-profit entities operating independently from the government. They are committed to addressing various issues, such as those related to society, culture, economy, and environment.
An NGO has to follow the due procedure listed by the Government of India, including selecting a name and type and drafting MoAs and AoAs. The entity is required to submit the application with attached documents to the regulatory authority for verification and granting of legal status.
It takes an NGO 10 to 25 working days to register in India, depending on various factors, including the type of NGO.
Depending on the type of NGO, the criteria to register depends on the minimum and maximum number of directors required for each type.
Three different types of NGOs exist in India – Trust, Society and Section 8 Company.
Yes. Since NGOs work for the cause of society on the principle of not-for-profit, they are eligible for tax exemptions.
NGOs are often excused from the purview of the GST. However, certain activities of the NGOs may or may not attract GST.
Section 12AA is a provision of the Income Tax Act that provides tax exemption for charitable organizations in India. However, NGOs must register with the Income Tax Department to avail of the benefits.
Form 10A is a provision given to NGOs to avail of tax exemption under section 12A.
NGOs in India that wish to participate in government partnership programs and initiatives must register with NGO Darpan to be eligible for them.
If a Section 8 Company is registered as a private limited company, it must have at least 2 directors. But if it is registered as a public limited company, it must have at least 3 directors.
The directors of an NGO must facilitate daily operations, manage accounts & finance, ensure compliance, represent the organization, and drive decision-making in accordance with organisational policies.
The procedure to register an NGO in Delhi starts with selecting a name and type for the NGO, adhering to DSC compliance, drafting MoAs and AoAs, and getting an official PAN card for the NGO.
While it is not mandatory to register an NGO, it is advisable to do so to avail yourself of various government benefits, including tax exemption and government grants.
No, one individual cannot start an NGO as the minimum number of directors required to start a Section 8 Company is 2.
NGOs raise funds through various means, including membership fees, sales of goods and services, grants from government and private institutions, corporate collaborations, partnerships, and donors.
NGOs hire employees and volunteers to run their operations. However, the volunteers do not get paid for their services; while the employees get paid, their compensation is less competitive compared to the private sector. This is because NGOs are funded and run entirely on donor contributions, unlike the private sector.
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