NGO / Trust Registration

Overview

An NGO is a non- government organisation with a charitable purpose, for the progress of society worldwide. NGO Registration is mandatory for the organisation which is planning to work for the welfare of the society.

It can be started as a Trust, a Society or Section 8 Company (a Non-Profit Company ) depending on the project you want to undertake. NGOs could have a broad variety of interests of society in mind.

NGOs work for so many good causes like human and/or animal rights, improving the health and welfare of children, expansion work and it can also involve raising awareness regarding some causes or activities of social importance. In India, NGO is a term for all non-profit organizations involving Trust, Society and Section 8 Company. Other titles for such not-for-profit organizations are “Sangathan”, “Sangh”, “Sangam”. Income tax exemption is open for all non-profit NGOs. These are sometimes mixed with non-profitable companies, which refers to a regular business not making a profit.

In India, work in the social sector is anchored by non-governmental organisations (NGOs). These organisations are crucial to supporting the poorer classes of society and weaker aspects of our economy that are often neglected by the government. Therefore, it is often said that NGOs do work that a wealthy welfare state would take up. In India, on the other hand, NGOs, more often known as charitable organisations, survive on the donations made by the wealthier sections of society.

NGOs and nonprofits in India play a vital role in the development and upliftment of the weaker sections of society. Majority of the Indian population is below the poverty line, with most people not having access to basic needs of food, water, and shelter. In fact, for people of lesser means, even access to education is considered a luxury rather than a necessity. Despite Government funding, we are still not able to tackle problems of poverty, unemployment, hunger, or provide shelter, sanitation, clean water, and electricity, in all parts of India. It is the selfless operations of nonprofits and NGOs that are undertaking necessary development projects to further our country’s growth story. This is why their role in the progress of the country is indisputable.

That said, the question of how to start an NGO in India is what plagues most people. Hopefully, this article will uncover everything you need to know about how to start an NGO, documents required for NGO registration, and NGO registration fees, and FCRA registration. NGO Registration is mandatory for the organization which is planning to work for the welfare of society. An NGO is a non-government organization with a charitable purpose, for the progress of society worldwide. It can be started as a Trust, a Society or Section 8 Company (a Non-Profit Company ) depending on the project you want to undertake. NGO’s could have a broad variety of interests of society in mind.

This could add Environmental causes, human and/or animal rights, improving the health and welfare of children, expansion work and could even involve raising awareness regarding some causes or activities of social importance.

In India, NGO is a term for all non-profit organizations involving Trust, Society and Section 8 Company. Other titles for such not-for-profit organizations are “Sangathan”, “Sangh”, “Sangam". Income tax exemption is open for all non-profit NGOs. These are sometimes mixed with non-profitable companies, which refers to a regular business not making a profit.

How to Start an NGO in India

To register an NGO in India there are three acts: Indian Trust Act, 1882, Societies Registration Act, 1862 and Companies Act, 2013. Before commencing the registration process, one needs to know about some basic points related to NGO.

1. One must formulate the mission and vision of the NGO. Just as you would require for a company, an NGO needs to have goals and a mode for achieving those goals.

2. Forming a governing body, which is one of the first steps in the NGO start-up process.

What Are the Laws Governing in India for NGO Registration?

There are three possible methods by which we can get listed NGOs in India:

• Society Registration

• Trust Registration

• Section 8 Company Registration

What Are the Objectives in India for NGO Registration?

If someone desires to serve society and help the people of the country then their ultimate goal must be to opt for NGO Registration.

Several reasons for NGO Registration in India are as follows:

Self-governing Organization: These are the bodies that specifically aim towards needy people and the betterment of society by helping the deprived ones.

Opportunity for growth: The definitive goal of an NGO is to help the people who are disadvantaged and provide them with chances for growth and prospect.

Several Benefits: You can go ahead with an NGO registration; once you have a distinct list of NGOs. There are several benefits that NGOs appreciate and will discuss onward.

Trust

The first way to register an NGO is Trust or more commonly called Charitable trust. Trust is a legal entity formed by the “trustor” or “settlor” who shifts the assets to the second party or “trustee” for the profit of the third party or “beneficiary”. Trusts are created to assist and encourage the seized sections of society. Any group of individuals can register a trust and in India, as such there are no particular laws to administer the public trust, though some states like Maharashtra and Tamil Nadu have their own Public Trust Act.

Benefits of Trust Registration

• Trusts can get land from the government Agencies

• In a maximum of the states, there’s no law that governs Public Charitable Trusts in India. However, many states such as Madhya Pradesh, Maharashtra, Gujarat, and Rajasthan do have Public Trusts Act.

• An NGO registered under the Trusts Act can practice the word “Govt. Regd.” or ‘Regd.’

• They get quite a few tax benefits such as Income Tax, etc.

• 80G certificate advantage under the Income Tax Act.

• Trust can get White capital for Building construction.

• Benefits in Entertainment Tax and Service Tax, etc.

Societies

A society is an entity that can be formed by a group of individuals united in their cause for developing science, arts, literature, social welfare, and useful information. Also, societies work for building military orphan funds, maintaining public museums and libraries. Societies are administered by the Societies Registration Act, 1860. They must be listed with the respective state Registrar of Societies to be eligible for tax exemption.

Benefits under Society Registration

NGOs registering under the Society Registration Act, 1860 can avail the following benefits:-

• Exemption from income tax : Society registration is a kind of NGO registration where the firm is saved from paying income taxes, and Income Tax exemption is something everybody desperately seeks for.

• Separate legal identity: NGO is a separate legal entity in the eyes of the law, which is one of the significant advantages that come with society registration. Each member of this society is accountable for their actions only. The members of such NGOs are responsible only for the activity undertaken by them and not by other members because of the distinction given.

• Limited Liability: Society NGO is a separate legal entity from its members. Thus the liability of the members is limited to their share only. That means, in no circumstances, the members’ assets cannot be utilized to pay the firm’s liabilities. Since society NGOs are a separate legal identity, members’ responsibility is limited to their share only.

• Legal protection: You will be provided with legal protection, once you have registered your society under the Society Registration Act, 1860. It indicates that no other company or people can use your company name, your assets, etc. Anybody would be subject to punishment if found liable for any violation.

Section 8 Companies

A Section 8 company is related to trust and society. The purposes of Section 8 Companies are to better arts, science, commerce, sports, social welfare, religion, charity, and environmental protection. They are registered under the Companies Act, 2013 for a charitable purpose. They have bigger credibility amongst government bodies, donors and other stakeholders.

Benefits of Section 8 company registration

NGOs registering themselves under Section 8 company registration can gain various advantages from it.
Those are as follows:-

• No minimum capital requirement: There is no minimum capital requirement for creating an NGO as per section 8 company. Unlike other existences such as public limited companies, section 8 companies have no prescribed limit for any minimum capital necessities. However, the capital structure of the firm can be modified at any stage, which may be needed for the growth of the business.

• Separate legal entity: Comparable to the trust, a Section 8 company also gets the special recognition of a ‘separate legal entity.’ Like Private Limited and other limited companies, a Section 8 company, too, continues its own identity and possesses its separate legal entity from its members. Furthermore, Section 8 Company has continued survival.

• Tax exemption: One of the advantages that every NGO receives is the benefit of tax. Aside from the stakeholders, the NGOs’ contributors can also receive tax exemption for the donation given to the NGO. It’s one of the most significant advantages that NGOs registering under Section 8 Companies are presented with, especially those subscribing to section 8 companies. Even the contributors can claim the tax exemption upon the donation made to this pattern of NGO.

• No stamp duty payable: NGOs are exempted from stamp duty formalities, which is unless applicable for the registration process. Such NGOs are also exempted from the payment of stamp duty appropriate for registration as fitting for record comparable to the one applicable in public limited companies or private limited.

• No title needed: There is no title demand. Moreover, section 8 companies do not need to use a suffix to its name, which the public limited or private limited company has to apply. Unlike in the case of the private limited and public limited company, where names and titles are obligations, a section 8 company doesn’t require to use a suffix next to its title.

• Better reliability as compared to others: There is better reliability. If it is compared with any other NGO structure, a Section 8 company is more reliable. The central government does not administer section 8 company, and hence the MOA (Memorandum of Association) and AOA (Article of Association) remain blessed. It is thus making its legal structure more dependable as correlated to trust or society NGOs.

• Security of ownership or title transfer: Secure transfer of ownership is something that Section 8 Company appreciates. As per Section 8 of the Income Tax Act of 1961, people can transfer the ownership of both moveable and immobile assets externally with no restrictions. Apart from the above-described advantages, there are many other advantages of section 8 company registrations, such as exemptions from income tax act, attending general meetings under a short notice period, which is within 14 days rather than 21 days, and many more.

What is the Procedure for the NGO Registration as a Trust?

Before we go through the registration procedure, let’s have a look at the Documents required for the Trust Registration.

Documents required for the Trust Registration

• Personal details of the Trustee such as the Name, age, residential address, Contact number etc.

• Address proof such as Voter Id, Driving licence or passport of the Trustee and the settlers.

• Ownership proof of the property such as Electricity Bill or House Tax receipt.

• A rent Deed duly notarized with rent receipts and No Objection certificate from Landlord on an INR10 stamp paper

Procedure for the Trust Registration

Some of the states in India have their own trusts act while some do not have any. These states follow the Indian Trust Act, 1882 for their Trust Registration.

1. At first, you need to draft the Trust Deed in which the following details are to be mentioned.

2. Name and Address of the Trustees

3. Name of the Trust (You can give a minimum of three preferences).

4. Address of the registered office of the Trust

5. Objectives and the Beneficiaries of the Trust.

6. Rules and Regulations that are to be followed by the Trust.

7. Tenure of the Trustee varies from 1 year to 5 years.

8. 80G and 12A Certificate application

9. Submit the Trust deed to the local Registrar along with one photocopy of the trust Registration. (Also the settler needs to be physically present at the time of registration along with the Original Id Proofs.)

10. Now, the Registrar will retain the photocopy, and you will get the photocopy of the Trust Deed.

What is the Procedure for the NGO Registration as a Society?

Before we go through the registration procedure, let’s have a look at the Documents required for theSociety Registration.

Documents required for the Society Registration

• First, you need to send a covering letter to register the society under the law.

• MOA (Memorandum of Association).

• Rules and Regulations of the Society.

• A list containing the members of the society.

• Affidavits of the office bearers

• Address proof of the registered office and NOC from the Landlord.

Procedure for Society Registration

• First, you need to select the Name of the society for the NGO Registration.

• The state government will look after the Security registration. You need to submit all the documents with the requisite fees to the Registrar of the societies.

• After the documents verification an Incorporation certificate with an NGO registration is allotted.

• It takes about one month for the issuance of the Incorporation certificate.

What is the Procedure for the NGO Registration as a Section 8 Company?

Before we go through the registration procedure, let’s have a look at the Documents required for the Section 8 Company Registration.

Documents required for the Section 8 Company Registration

• Id proofs such as PAN Card or Aadhar Card of the Directors.

• Address proof of the registered offic

• Passport size photograph of the Directors.

• Rent agreement of the Registered Office.

• NOC from the owner (in case of the registered office)

• Utility bills such as telephone bills etc.

• Assent to work as a Director in Form DIR-2

Procedure for the Section 8 Company registration

1. Firstly, you need to apply for the DSC of the proposed Directors.

2. After this, you need to select a name for the Section 8 Company which should be in accordance with the rules mentioned.

3. Draft MOA and AOA.

4. You need to file an incorporation application for the Section 8 company incorporation. Now, licences can also be applied through filing of an incorporation form.

5. After all the verification of the documents, the Registrar of the Companies will issue the Certificate of Incorporation along with the licence

Recent Update

According to the bill passed in the Lok Sabha, the Foreign Contribution Regulation Act (FCRA) was amended for the NGO office-bearers to compulsorily submit their Aadhaar numbers while registration.

Why Choose Legaltax?

• Legal Tax is a great service providing organisation and all its experts work very efficiently.

• Legal Tax does the NGO/TRUST registration process in a very sophisticated manner without any hassle and complications.

• They provide very good services to their clients. The reviews from the clients are very satisfactory