A Non-Governmental Organisation or NGO is a non-profit organisation that works independently from the government, though the government generates its funds. Read this blog to learn more about NGO registrations in India.
What Are The Methods For NGO Registration In India?
Registration is an essential and mandatory requirement for any organisation in India, whether a small home-based business or an FMCG company. Once you register your organisation, you can expect many benefits from the government related to a tax rebate. If the NGO is looking for any tax deduction on its fund deposited in a bank or wants to provide an income tax benefit certificate to its donors, then registration is a must. NGOs usually work to raise a fund for social welfare work, so for its accountability, there should be legal status for the organisation to function without any legal complication.
Different Methods Of NGO Registration In India:
An NGO can be registered as a Trust, Society, Non-Profit Company, or any other type of NGO under the Trust Act, Society Act, Company Act, or any other act. The registration process depends on the kind of NGO. Let’s begin with Trust.
A public charitable trust is the best example of a not-for-profit organisation in India. A public charitable trust is developed under typical humanitarian grounds with the motive of education, medical relief, relief of poverty, relief of any natural calamities, and other general public welfare activities. In India, these public charitable trusts are irrecoverable. Some states like Maharashtra, Madhya Pradesh, Gujarat, and Rajasthan have Public Trust Acts. However, there is no national law for Public Charitable Trust in India.
Societies can be considered when a group of people join hands to do charitable work for society’s betterment. They are formed for doing welfare work. A governing body runs societies. Societies should get registered as per the Societies Registration Act 1860. Many Indian state governments already follow this act to control Societies’ activities. Societies can be officially declared as broken up.
- Section 8 Companies
A company is identified as a section 8 Company when registered as a Non-Profit Organization (NPO). This type of NGO generally promotes arts, commerce, education, charity, religion, and the protection of nature and uses its profits to promote these fields.
Different Laws Governing NGO Registration In India Under Different Methods
Below is the list of laws that govern NGOs in India:
- Societies Registration Act 1860
- Indian Trust Act 1882
- Section 8 Company.
These are the three laws with the help of which the Indian government regulates NGOs’ operations and registration procedures. In accordance with the above, there are three types of NGO registration procedures.
- Trust Registration.
- Society Registration.
- Section 8 Company
Trust Registration: Whenever an NGO is registered under the Indian Trust Act of 1882, it is recognised as a Trust Registration. It can be a public charitable trust or a private trust registered with the purpose of helping people with difficulties in socioeconomic and medical perspectives.
Once the NGO get registered itself under this law, it gets a number of benefits from the Indian government. Such benefits include
- The government provides land to the Trust to establish its office.
- The NGOs are entitled to use the government-registered name.
- Tax exemptions.
- 80G certificate benefits the donors who have made donations.
- Provide capital for office construction.
- Exemption on service and entertainment tax.
Society Registration: An NGO formed based on membership is usually registered under the Societies Registration Act of 1860. This type of NGO usually promotes charitable work that comes on humanitarian grounds, including medical help, educational support to the society’s backward section, and protection for the environment.
Benefits of Society Registration can be summed up this way:
- A registered Society is eligible to get a separate legal entity where every member will be held responsible for any miscreants created by them, not any other fellow member.
- The member’s liability in a society NGO is limited by the number of shares they hold.
- Society registration enables the NGO with a tax deduction benefit which helps them with a lesser amount of income tax payable.
- An NGO registered under Society Registration Act 1860 enjoys a legal shield so nobody outside the Society can use its brand name or their NGO’s assets.
Section 8 Company Registration: This is another way of registering an NGO. This NGO’s purpose is similar to the other two types of NGOs. In the given context, NGOs use their fund to fulfil the purpose of welfare of the society. The shareholders are not eligible to use this fund for any personal reason, for that matter of fact.
The NGO can be registered as a private limited, a public limited, a solo owner company, or an LLP. Once the NGO get registered under Section 8, it enjoys the following benefits:
- No basic funding is required to establish the NGO as a Section 8 company.
- The NGO, as a section 8 organisation, established a distinct legal identity.
- Tax exemption is the most attractive benefit of this registration type if the investor invests.
- Exemption on government stamp duty at registration is also one of the major benefits here.
- No designation is required like INC, Ltd. Co. LLC. Etc.
- This NGO gets increased credibility regarding fundraising programs compared to the other two types of NGOs.
- Considered to be more flexible in changing ownership (movable and immovable assets).
NGOs in India have an important contribution to the field of social welfare: https://ngodarpan.gov.in/. They have a long history of promoting art, science, literature, and many more within the domestic market. So, registration is a must to make these organisations more powerful and give them many financial benefits. It empowers them in terms of accumulating more funding from national as well as from international donors. Because of the income tax benefits, more and more people are attracted to making financial contributions to NGOs, which in turn help them become more financially sound. At the same time, such financial assistance allows them to work in diverse markets. Get in touch with the experts of Vakilsearch to learn more about NGO registration in the country.
- Benefits of Having an NGO Certificate in India
- Types of NGOs in India
- Categories of NGOS
- Pan Card for NGO
- Sec 80G of Income Tax Act