In India, the term NGO (Non-Governmental Organization) refers to an organisation that operates independently of the government and the profit motives of conventional enterprises. These organisations operate in places the government cannot reach directly and efficiently to fill in the gaps created by its inability to do so. The word NGO is used as an umbrella to encompass all legal entities that seek philanthropic and charitable contributions and use them for the benefit of society without the intention of earning a profit or that use the profit from the NGO’s operations to further its mission. These organisations have a well-defined cultural, educational, religious, or social mission. Nongovernmental organisations are not “owned” by anyone and cannot distribute income as dividends. Profits from economic operations are reinvested or spent on activities consistent with their missions. Donations, financial grants from unilateral and multi-lateral agencies, membership fees, rentals from leased immovable properties, various sources, and interest and profits on investments are typical sources of revenue for non-governmental organisations.
COMPLIANCES OF A TRUST | |
Compulsory Audit of Accounts | A Chartered Accountant must audit a Private Trust if its income exceeds the Income Tax Act, 1961’s non-taxable income limit. |
Annual Return of Income | After the accounts of the Trust are audited by the Chartered Accountant, the audit report should be filed along with the Annual Return of income under Form ITR-7 on or before the due date. |
Report of Foreign Contributions
| Every Trust which receives foreign contributions needs to submit information duly certified by a Chartered Accountant and accompanied by an Income and Expenditure Statement, Receipts and Payments Account and Balance Sheet within 9 months of the closure of the financial year to the Secretary, Ministry of Home Affairs, Government of India, New Delhi. A ‘Nil’ report must be submitted if no such contribution is received during the last financial year. |
Submission of Annual Account Statement of FC A/c
| Duly certified copy of the Account Statement of FC A/c needs to be furnished within 9 months of the closure of the financial year along with the Report mentioned above in point 3. |
Issue of Certificate of TDS | Where any Private Trust is deducting tax at source for payment of salaries to the staff or employees (kept for managing the Trust Property), it needs to furnish certificates of TDS to the persons on whose behalf TDS was being collected. It should be done within 1 month from the financial year’s closure date. |
Publication of Accounts in newspaper
| Where annual income or receipts of the Trust (generated from the Trust Property) exceeds Rs. 1,00,00,000 (INR One Crore). |
Charitable and religious trust income is tax-exempt under specific conditions. Section 10, Section 11, etc., exempt trusts. Trust exemptions include-
80G Certificate
The 80G Certificate exempts donors to charitable trusts or the Section 8 Company from taxation. A 12A-registered charitable organisation or trust can provide tax exemption under Section 80G. Deductions are limited. Donations over 10% of gross income are not tax-deductible.
Who can avail of tax savings under 80G?
| Who cannot avail of tax savings under section 80G? |
● 80G grants tax exemption to donors. ● Only 80G donations to designated trusts and organisations are deductible.
| ● If the donation is made to a foreign trust, you cannot qualify for tax savings under section 80G. ● The deduction cannot be claimed if the donations are made to one or more political parties. ● The deduction cannot be claimed even for printing or publishing brochures, flyers, and pamphlets. ● If made to eligible institutions and trusts, Donations by NRI also qualify for tax exemptions under section 80G. ● If the donation is made from an individual’s salary and the donation receipt carries the employer’s name, then employees can claim under Section 80G. |
How to obtain an 80G Certificate? The commissioner of Income-tax will process registration under this section after receiving an application from the applicant in Form 10 G. The following documents should accompany the application.
Registering 80G After receiving an application, the Commissioner of Income Tax will register under this section. ● Log on to the IT department’s E-filing portal, select “Income Tax Forms,” select “Form 10A,” and select “Prepare and Submit Online” for submission. ● Fill out the form and attach any relevant documents. ● Return filing requires digital signatures or EVC. | |
Donations Eligibility-
Donations Eligible for 100% Deduction Without Qualifying Limit | Donations Eligible for 50% Deduction Without Qualifying Limit
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● National Defence Fund set up by the Central Government ● Prime Minister’s National Relief Fund ● National Foundation for Communal Harmony ● An accredited university/educational institution of national prominence Zila Saksharta Samiti created in any district under the chairmanship of the district collector ● Fund set up by a State Government for medical treatment to the needy ● National Illness Assistance Fund ● National Blood Transfusion Council or any State Blood Transfusion Council ● National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities ● National Sports Fund ● National Cultural Fund ● Fund for Technology Development and Application ● National Children’s Fund ● Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund for any State or Union Territory ● Army Central Welfare Fund or Indian Naval Benevolent Fund or Ai ● Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the Gujarat earthquake (contribution made between January 26, 2001, and September 30, 2001) or ● Prime Minister’s Armenia Earthquake Relief Fund ● Africa (Public Contributions – India) Fund Swachh Bharat Fund (applicable from FY 2015-16)
| ● Jawaharlal Nehru Memorial Fund ● Prime Minister’s Drought Relief Fund ● Indira Gandhi Memorial Trust ● Rajiv Gandhi Foundation |
12A Registration
Trusts and other non-profits receive one-time 12A registration from the Income Tax Department. 12A registration exempts income tax. 12A registration is usually requested following incorporation. 12 registrations exempt trusts and NGOs from surplus income taxes. All entities can register 12A.
Benefits of 12A registration | Procedure of Application | Documents required |
● 12A registration’s main benefit is the income tax exemption for income use. A 12A registered entity’s charitable/religious spending constitutes income. ● Section 12A registration qualifies the organisation for government and private grants. ● Section 80G benefits apply to 12A organisations. NGO 80G registration is separate.
| ● To claim exemption, an NGO should make an application to the Principle Commissioner or Commissioner of Income Tax online in Form 10A by below mentioned steps: ● Log on to the E-filing portal of the IT department ● Go to “Income Tax Forms” ● Select the Form Name as Form 10A ● Select the option of “Prepare and Submit Online” in submission mode. ● Fill in the details as required in the form and attach the required and applicable attachments. ● Submit the form using digital signatures or EVC as required during return filing. | ● Self-certified copy of the incorporation document of Trust/Societies ● Self-certified copy of the registration with Registrar of Companies or Registrar of Firms or societies or Registrar of Public Trusts, as the case may be ● Self-certified copy of registration under FCRA, if the applicant is registered under such Act ● Self-certified copy of existing order of registration under section 12A or 12AA or 12AB, as the case may be ● In case of existing entities, copies of annual accounts for the period not exceeding 3 years immediately preceding the year in which the application is made ● Where the income of the entity includes profits and gains of business as per the provisions of sub-section (4A) of section 11, copies of annual accounts and audit report u/s 44AB for 3 years immediately preceding the year in which the said application is made ● Self-certified copy of the documents evidencing adoption or modification of the objects ● Notes on the activities of the applicant trust or institution ● If registered on DARPAN Portal, then details of such registration |
Form 10A
Entities registering under Section 12A must file Form 10A. Form 10A and Section 12A registration are done online. Online filing requires a digital signature. Section 12A applications require the trust founder’s digital signature. A charity, religious trust, or institution can apply for Section 12A registration in Form 10A. Apply online only. The Income Tax Commissioner receives the application and supporting documents.
FCRA Registration
The Foreign Contribution Regulation Act 2010 is called FCRA registration, which is necessary to obtain charitable trusts, societies, and Section 8 Companies that receive foreign contributions or donations.
Objectives of FCRA 2010 |
Procedure for Application | Documents required |
● Control who receives and uses foreign contributions. ● To restrict the receipt and use of foreign hospitality or foreign contribution for unfavourable national interest activities and matters related to or incidental. |
● The FCRA internet portal must be accessed first. ● Click on Form FC-3A (Application for FCRA Registration) or 3B (Application for FCRA Prior Permission). ● The webpage will, after that, offer an online application. ● After selecting Apply Online, click Sign Up to create an account and password. ● The applicant can log in after creating a username and password and seeing the notification. ● After logging in, choose FCRA Registration from the I am applying for the menu. Select Apply Online, then Proceed Registration. ● To register, click the FC-3 menu in the title bar. ● The applicant fills out the association form and attaches the necessary documents: Darpan ID (not mandatory), Association Address, Number, Date, Nature, and Purpose. After filling in these details and attaching them, click submit. ● After entering Executive Committee information, click Save. ● Provide bank name, account number, IFSC code, and address. ● After entering bank details, upload all documents in PDF format. ● After entering the place and date, click the submit button. Clicking that button completes the online payment. The form cannot be changed after payment and submission. ● (FCRA registration lasts five years. However, FCRA registration must be renewed 6 months before expiration. | ● Copy of registration certificate of society or trust deed, as the case may be. ● Copies of the audited statements of accounts for the last three years. ● Copies of the annual report for the last three years. ● Bank Details ● List of governing body ● Name ● Father’s Name ● Occupation ● Designation ● Address ● Name of the chief functionary and his mobile Number ● Telephone Number of the office ● Copy of PAN Card of The Society /Trust |
NITI Aayog Registration-
All NGO/VO/Trusts must get enrolled themselves on NITI Aayog site and get Unique Id before getting any grant from Government Departments.
Visit https://ngodarpan.gov.in/
Click Login/Register and Sign Up.
Provide NGO/VO name, contact person mobile number, and email. Enter Security Code, submit the request, and provide NGO/VO PAN.
OTP will be sent to your phone and email. After OTP verification, generate a login password.
Return to the home page and log in using Sign In. Enter your username and password.
PAN Number and NGO/VO Name are pre-filed after login.
Provide these details to continue:
a) NGO Address, b) NGO/VO Registration authority (under which act), c) Register and upload RC copy for verification.
Act Name and Registration Date under this Act
e) List any other registrations, such as FCRA, GST, etc.
List at least three Executive Committee/Founder Members/Office Bearers as of application.
List all government funds received in the last 5 years.
List Key Contact for Questions.
Describe the NGO/VO Core Area of Working with the State. Because government departments give grants based on their work area, this is crucial.
Give these details. Completes your profile and applies.
The officer receives your application for processing.
The officer will approve or request more documents after verifying your paperwork.
If your application is granted, you will receive a unique ID for future government correspondence.
Application clearance takes 3-5 days.
Import Export Code-
Anyone starting an import/export firm in the country needs an IEC. It’s DGFT-issued (Director General of Foreign Trade). Lifetime 10-digit IEC code. Without the Import Export Code, importers cannot import products, exporters cannot profit from DGFT export schemes, etc.
Registration Process | |||
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First, you need to prepare an application form in the specified format – Aayaat Niryaat Form ANF-2A format and file it with the respective Regional office of DGFT.
| Secondly, you need to prepare the required documents with respect to your identity & legal entity and address proof with your bank details & the certificate in respect of ANF2A. | Once your application is completed, you must file with DGFT via DSC (Digital Signature Certificate) and pay the required fee for the IEC Registration. | Finally, once your application is approved, then you will receive the IEC Code in a soft copy from the government.
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Documents required- ● Digital photograph (3*3) of the secretary/chief executive/signatory applicant ● Registration certificate of society/copy of the trust deed ● Copy of passport/voter id UID/driving license/PAN of the managing trustee/chief executive signing the application ● Sale-deed, in the case of self-owned business ● If the business is rented, then rental/lease agreement ● Bank Certificate as per ANF 2A/ Cancelled cheque bearing the blueprinted name of the applicant entity and A/c no. | |||
Compulsory Audit of Accounts
Annual Return of Income
Report of Foreign Contributions
Submission of Annual Account Statement of FC A/c
Issue of Certificate of TDS
Maintenance of Books of Accounts, Preparation of Financial Statements and Conducting Statutory Meetings
Documents/Details Required for GST Registration of a Society after registration-
Compliances as per GST Law for Society
Some Additional Certificates: The process of obtaining an 80G certificate, 12A certificate, FCRA certificate, NITI Aayog certificate and Import Export Code (DGFT) is the same as it was for Trusts.
Event-based Annual Compliances of Section 8 Company
Event-based, as the name suggests, are the compliances need to be filed on the occurrence of specific events. Unlike annual compliances, these are non-periodical. The checklist for event-based compliances for Section 8 Company is as follows:
Documents/Details Required for GST Registration of a Section 8 Company After Incorporation
Compliances as per GST Law for Section 8 Company
Compliances as per Income Tax Act for Section 8 Company
Exemptions for a Section 8 Company
Some Additional Certificates: The process of obtaining an 80G certificate, 12A certificate, FCRA certificate, NITI Aayog certificate and Import Export Code (DGFT) is the same as it was for Trusts and Societies.
“Corporate Social Responsibility (CSR)” means the activities undertaken by a Company in pursuance of its statutory obligation laid down in section 135 of The Companies Act, 2013. According to it, every company is required to do CSR activities which have:
From April 1, 2021, all CSR projects must file eForm CSR-1 with the Ministry of Corporate Affairs. MCA asked stakeholders to file eForm CSR-1 as soon as feasible on MCA Portal. All Form CSR-1 submitters receive a CSR Registration Number. This article describes eForm CSR-1 filing.
A firm can only give an NGO CSR cash if:
Documents required
Process of registration
Accountants, Company Secretaries, and Cost Accountants shall digitally verify Form CSR-1. The portal generates a unique CSR Registration Number when Form CSR-1 is submitted.
