It is essential and mandatory for any organization in India to register, whether it is a small home-based business or an FMCG company. Registration of your organization will provide you with many benefits related to tax rebates. An NGO must register if it intends to receive a tax deduction on funds deposited in a bank or wants to issue a tax benefit certificate to donors. It is common for NGOs to raise money for social welfare, so for the organization to be accountable, it must have legal status.
Different Methods Of NGO Registration In India:
It is possible for an NGO to be registered under the Trust Act, Society Act, Company Act, or any other law. It depends on what kind of NGO you are registering. Let’s start with trust.
The best example of a not-for-profit organization in India is a public charitable trust. Public charitable trusts are formed under common humanitarian grounds for the purpose of providing education, medical assistance, relief from poverty, relief from natural disasters, and other general public welfare activities. These public charitable trusts are irrecoverable in India. There are Public Trust Acts in some states, including Maharashtra, Madhya Pradesh, Gujarat, and Rajasthan. India, however, does not have a national law on public charitable trusts.
A society can be considered when a group of people work together to better society. Their purpose is to provide welfare services. There is a governing body that runs societies. The Societies Registration Act 1860 requires societies to register. Several Indian state governments already follow this act to control the activities of societies. In some cases, societies can be declared to be broken up officially.
Section 8 Companies
When registered as a Non-Profit Organization (NPO), a company is identified as a section 8 company. An NGO of this type usually promotes arts, commerce, education, charity, religion, and nature protection, using its profits to do so.
In India, NGO registration is governed by different laws under different methods
NGOs in India are governed by the following laws:
- Societies Registration Act 1860
- Indian Trust Act 1882
- Section 8 Company.
The Indian government regulates NGOs’ operations and registration procedures through these three laws. Accordingly, there are three types of NGO registration procedures.
- Trust Registration.
- Society Registration.
- Section 8 Company
Whenever an NGO registers under the Indian Trust Act of 1882, it is recognized as a Trust Registration. The trust can be a public charitable trust or a private trust registered to help people facing socioeconomic or medical difficulties.
NGO’s that register themselves under this law receive a number of benefits from the Indian government. Benefits such as these include
- To establish its office, the government provides the Trust with land.
- Government-registered names can be used by NGOs.
- Exemptions from taxes.
- Donors who have made donations benefit from 80G certificates.
- Provide capital for the construction of office buildings.
- Tax exemption on services and entertainment.
A membership-based NGO is usually registered under the Society Registration Act of 1860. The work of this type of NGO usually revolves around humanitarian causes, such as medical aid, educational support for the society’s backward sections, and environmental protection.
The following are some of the benefits of registering a society:
- Registered societies can establish a separate legal entity in which every member is held accountable for the misdeeds of fellow members, not other members.
- In a society NGO, members’ liability is limited by their shares.
- NGO registration allows them to receive a tax deduction benefit, lowering their income tax obligations.
- NGO’s registered under the Society Registration Act 1860 have a legal shield that prevents third parties from using their brand name or assets.
Section 8 Company Registration:
This is another way of registering a non-profit organization. There is no difference between this NGO’s purpose and those of the other two types of NGOs. The purpose of NGOs’ funds is to ensure the welfare of society in the given context. The shareholders are not allowed to use this fund for any personal purpose.
There are four types of NGO registrations: private limited, public limited, sole proprietorships, and limited liability partnerships. NGO’s that register under Section 8 enjoy the following benefits:
- Basic funding is not required to establish the NGO as a Section 8 company.
- The NGO established a distinct legal identity as a section 8 organization.
- A tax exemption is the most attractive feature of this registration type if the investor invests.
- Another major benefit is the exemption from government stamp duty at registration.
- There is no need for a designation such as INC, Ltd., Co. LLC. Etc.
- There is an increased credibility for this type of NGO when it comes to fundraising programs.
- It is considered to be more flexible when it comes to changing ownership (movable and immovable assets).
India’s NGOs contribute significantly to social welfare. They have a long history of promoting art, science, literature, and many other things on the domestic market. Thus, registration is essential for these organizations to become more powerful and gain financial benefits. In addition, it empowers them to acquire more funding from national and international donors. Income tax benefits increase the number of people contributing to non-profit organizations, which in turn helps them become more financially stable.
Furthermore, such financial assistance allows them to work in a variety of markets. Learn more about NGO registration in the country by contacting us.