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NGO Registration

NGO Registration

NGO is a non- government organization established to promote social welfare or any such other object. They typically run social welfare programs like food campus, medical aid, Medicare etc. There are various types of NGO like society, trust and section 8 companies. NGOs can’t payout profits as dividends to members; it needs to reinvest its profit back in NGO activities.

Non- government organization commonly referred to as NGOs, are usually non-profit and sometimes international organizations independent of governments and international governmental organizational organizations that are active in humanitarian, educational, healthcare public policy, social human rights, environmental and other areas to affect changes according to their objectives. They are thus a subgroup of all organizations founded by citizens who include clubs and other associations that provide services, benefits and premises only to members.

Eligibility to Start an NGO

  • If an NGO is to be incorporated as a private limited company, there must be a minimum of two directors.
  • In the case of incorporation as a public limited company, a minimum of three directors are necessary.
  • 200 members is the maximum allowed for a private limited business.
  • For a public limited company, there is no member limit.
  • If registering as an NGO, there is no fee.

Know the basics

Types of NGO Registration

To run the NGOs in the form of (Companies, Trusts, and Societies) in an accurate manner, a certain set of rules need to be followed. To register any of the below-mentioned ways, an applicant needs to follow the various laws. NGO Registration can be done in 3 ways:-

Section 8 Companies

Section 8 Companies are Limited Liability entities that are formed with the aim of social welfare. Such NGOs are registered under the Companies Act, 2013.

Societies

Societies are operated under the authority of a governing body for a charitable purpose. Such NGOs are registered under Societies Registration Act, 1860.

Trust

Trust means a Charitable Trust registered under Trust Act, 1882. In a trust, the owner transfers his assets to the trustee for the benefit of the beneficiary.

Documents required for NGO Registration

  • PAN card
  • Identity Proof (Aadhar card/ voter ID etc.)
  • Residential proof
  • Bank statement
  • Registered office address proof
  • Passport (Mandatory)

Registration Process of an NGO

  • Step 1.Directors

    The applicant needs to obtain a DSC of the proposed Directors of an NGO. After a DSC is obtained, file Form DIR-3 with the ROC to get a DIN.

  • Step 2.Get directors identification number (DIN)

    After the approval of DIR-3, the respective ROC will allot a DIN to the proposed directors.

  • Step 3.Name Approval

    Next the applicant needs to file Form INC-1 with the ROC to apply for a company name. Preference of 6 names can be applied from which one would be allotted by ROC, depending on the availability.

  • Step 4.Apply for the licence

    After the approval from ROC, file Form INC-12 to apply for a license for an NGO

    Documents to attach with INC-12:

    • Declaration, as per Form INC-14 (Declaration from CA)
    • Declaration, as per Form INC-15
    • Draft Article of Association (AOA) and Memorandum of Association (MOA) as per Form INC-13
    • Estimated Income & Expenditure for next 3 years
  • Step 5.Incorporation

    After the applicant has obtained the NGO license, he/she needs to file SPICE Form 32 with ROC for incorporation. After the ROC has checked and verified the documents, it issues a Certificate of Incorporation with a unique Corporate Identification Number (CIN).

Advantages of an NGO

  • 1.Tax saving

    Registering your company as an NGO under the Companies Act, 2013 and avail several taxation benefits for the directors of the company. NGOs are exempt from several taxes, and it helps the company save taxes and invest the saved money in further projects.

  • 2.Lower Share Capital

    All the companies need a minimum share capital to function independently. This isn’t the case with NGOs since they can be directly funded with the donations made to them. The subscriptions can also help to support the proceedings undertaken by the company. This means that NGOs do not need a higher share of capital to function independently.

  • 3.Title Usage

    Most companies are obligated to make their limited liability status public. This is not the case with companies registered under the Companies Act. These registered companies are exempted from the use of any titles. They can function without making their limited liability status public which is a significant benefit for the company in terms of the capital they need to make public.

  • 4.Transfer of ownership/titles

    Companies registered as NGOs under the Income Tax Return Act of 1961 are not restricted to transfer their ownership or claims of the interests earned. However, other companies cannot move their ownerships with such ease, which benefits NGO registered companies.

  • 5.Stamp Duty Exemption

    All companies registered as NGOs under Income Tax Act 2013 are exempted from stamp duty, which accounts for more tax-saving methods for the company. All the taxes saved through stamp duty are then invested in the promotion of the motto taken up by the company. Exemption of stamp duty protects funds for the company, which makes the functioning of the company smoother increasing the productivity of the company.

Frequently Asked Questions

  • Q1.What is NGO ?

    An NGO stands for Non – Government Organization. The term NGO originated from the United Nations (UN), and is normally used to refer to organizations that do not form part of the government and are not conventional for profit or business. Today there is need for the betterment of the underprivileged section of the society. This need can be satisfied using non-profit organization.

  • Q2.What are the types of NGO ?

    There are Three types to get NGO registration. To run the NGOs in the form of (Companies, Trusts, and Societies) in an accurate manner, a certain set of rules need to be followed.

  • Q3. What are the different Acts in which NGO is registered ?

    Non-Profit NGOs are registered under 2 acts. One is Indian Trust Act, 1882 and the other is Indian Societies Act, 1860 , Indian Trusts are registered under Trust Act and the Societies are registered under Societies Act. The third type of act is Indian Companies Act, 1956 under which a profitable NGO is registered.

  • Q4. When is an NGO eligible for Government funding ?

    An NGO is eligible for Government funding after 3 years. However, in some special cases, an NGO can get Government funding even after 1 year if its project gets approved.

  • Q5. What is CSR

    CSR stands for Corporate Social Responsibility. These are voluntary activities undertaken by a company to operate in an economic, social and environmentally sustainable manner. According to new CSR rule as implemented in 2013, every company makes a minimum profit of 500 crores must donate some amount of money in eradicating poverty, education and benefits of the society.

  • Q6. What are the minimum members required to register an NGO ?

    The minimum members required to register an NGO is 3 if it is a Trust. It is not necessary to have all 3 members from 3 different states. If you are registering a Society, you must have a minimum members of 7 from seven different states of India.

  • Q7. What are the primary posts involved in an NGO ?

    An NGO has basically 3 min posts which that of a President, General Secretary and Treasurer. In some cases, you can also have a Vice President.