NGO - Eligibility, Types and Benefits

NGO - Eligibility, Types and Benefits

NGO - Eligibility, Types and Benefits

NGOs in India

 An NGO or Non-Governmental Organization is basically a non-profit or not for profit organization which strives to work towards the betterment of the underprivileged sections of Society. NGO’s could have a wide variety of interests of society in mind.  This could include Environmental causes, human and/or animal rights, improving the health and welfare of children, development work and could even include raising awareness about some causes or activities of social importance.

With all that being stated, sometimes NGO’s are also established to act as fronts for political as well as religious interests. However, NGOs being non-profit organizations, these entities are not allowed to shell out the profits to the members as dividends. All profits made by the organization have to be invested towards the social cause the NGO is helping.

NGOs essentially raise the money from donors, who might or might not receive tax breaks on their donations.

Acts governing NGO registration process

The national authority in India allows for online registration of an NGO under three laws:

  1. Trust under Public Trusts Act of each state.
  2. Society under the Societies Registration Act 1860
  3. Section 8 Company under the Companies Act, 2013
Each law defines the formation of a different type of organization, namely – Trust Registration, Society Registration, and Section 8 Company Registration. Choosing the kind of registration procedure for the charitable firm is crucial. 

Who Can Form an NGO in India ?

Any person competent to contract, be an individual, a body of individuals or an artificial person such as an association of persons, an institution, a limited company, a Hindu undivided family through its karta, can form an NGO.

NGOs are essentially of charitable or religious nature, and can be constituted by any person without any distinction of caste or creed.

Why register an NGO in India?

Benefits
  1. A registered NGO gains the legal status and becomes accountable for the funds received. For instance, when an individual donates funds to a charitable trust, it is received under the name of the organization and used for the trust’s activities. In an unregistered firm, the assets can be received under anyone’s name and may be used for their own profit.
  2. An organization that is registered as an NGO reinforces the ethical, social and legal norms of our society.
  3. The basic requirement for running an NGO is to have a bank account under its name. In order to open an account, it is mandatory to be registered as a Trust, Society or Section 8 Company.
  4. The registration of an NGO is necessary to seek tax exemption from the Income Tax Authority.

Type of NGO based on Registration / Incorporation

A non governmental organization (NGO) may be formed and registered as-

i. Trust: As a public charitable trust. A public trust, whether relating to movable or immovable property, may be created by mere delivery of possession with a direction that the property is to be held under trust. However, a written instrument of trust signed by the author and registered, is always desirable.

ii. Society: Section 20 of the Societies Registration Act lays down that charitable societies and societies established for the promotion of science, literature of the fine arts may be registered under that Act. A society registered under the said Act is a legal entity apart from its members and under section 6 of the said Act, it can sue or be sued in the name of its President, Chairman, Secretary or members of the governing body or Trustees. In Secretary of State India v. Radha Swami Satsangh it was held by the Bombay High Court that the registration of a charity under the Societies Registration Act 1860 was a prima facie evidence of valid dedication of property for charitable purposes.

iii. Company: An association may be registered under Section 25 of the Companies Act, 1956 if the Central Government is satisfied that it is about to be formed as a limited company for promoting commerce, are, science, religion, charity or any other useful object and it intends to apply its profits, if any, or other income in promoting its objects and to prohibit the payment of any dividend to its members. In such cases the Central Government may by license direct that the association may registered as a company with limited liability without the addition to its name of the word “Limited” or the words “Private Limited”.


Documents for NGO Registration

Here we list down the mandatory documents required for registration of an NGO
  1. A requesting letter  for registration signed by founding members stating purpose of formation
  2. Certified copy of MOA [Memorandum of Association]
  3. Copy of the rules and regulations members will abide by
  4. Name, Address, Occupation of all members of society with signatures
  5. Minutes of meeting
  6. Declaration by President of Society
  7. Sworn affidavit from the President or Secretary,  declaring the relationship between subscribers
  8. Address Proof of Registered office and No-Objection Certificate (NOC) from the landlord

Forms for NGO Registration

Form INC 1 : Name registration of NGO
Form INC 12: Form should be submitted to acquire license to run an NGO
Form INC 13 : Memorandum of Association ; INC-15 is declaration by each subscriber to the Memorandum
Form INC 7 : Application for Incorporation of the NGO.
Form INC 22: Details of the Registered Address
Form DIR 12: To appoint directors of the NGO

FAQs on NGO Registration


Q.  What to register- Trust, Company or Society ?
Depending on the type of work you want to do, it is best to apply accordingly. 

Q. What are other alternatives to start and set up a Non Profit Organisations ?
If you do not want to start an NGO, you have other options by which you can help society. You can start a club, a volunteer service, be part of a local chapter of an already existing NGO and even be a fiscal sponsor.

Q. Can any government employees or officer be a member of NGO ?
The answer to this question is yes. Government employees or officers can be part of NGOs provided the NGO is not anti-government. There are a few rules too that these people have to follow, one of them is to make sure that the NGO is not profit making.

For more information on this visit www.taxaj.com
Posted by Pooja
Team Taxaj

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