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How to Start an NGO in India

The full gamut of well-informed, swift, and perfect services for NGO registrations in all across India and the whole world is extended responsibly and quite economically by ours internationally renowned lawyers, as a significant auxiliary service of ours full-service law firm of India. In ours this elaborately drafted and very beneficial web article, presented generously is rich and varied information regarding all types of NGOs present in India, together with in-depth information about how to start an ngo in india, anywhere in the entire country. Located in glorious Delhi, the most prominent and admired legal services of ours globally famous law firm are concerned with the Company and Commercial laws, Foreign Direct Investment, and the Intellectual Property (all categories of it).

What is An NGO?

An NGO (Non-Governmental Organization) is the social service organization which is not run and controlled by any government, nor has any connection with any political party. These organizations are better known as the Non-Profit Organizations (NPOs), as the main motive of these benevolent organizations is to serve and support others, especially the poor, indigent needy, and the weaker sections of the society, with intentions of providing these people better living conditions, health and well-being, education, employment, and other knowledge and information for living a productive and meaningful life in society. An NGO can have any specific aims and objectives for social development, welfare, and prosperity. More information about the diverse categories of NGOs in India, and how to register an ngo, is provided separately in the sections below in detail. Here, it may be mentioned that, detailed information regarding how to start an ngo, can be obtained from any qualified Chartered Accountant (CA) or any well-informed and richly experienced Lawyer. However, as formation and registration of an ngo essentially requires some legal formalities and processes, selection of a well-experienced lawyer is certainly a right and securing choice for ngo formation.

Types of NGOs

In India, there are three main categories of not-for-profit organizations, there are the following:

A Trust could be a private trust or a charitable public trust. The private trusts are established for certain private purposes, such as running a private institution, and are generally not entitled to acquire any tax related benefits. On the other hand, the public charitable trusts are formed for some philanthropic and charitable objectives to help the poor and needy sections of the society. In India till now, there is no central or federal Act for registration of trusts; therefore, for registration and regulation of these used commonly are the Indian Trusts Act of 1882, or the Bombay Public Trusts Act (BPT Act) of 1950, or any other Trusts Act devised by the State concerned.

Ours this highly informative, productive, and beneficial web article is now going to provided detailed and elusive information about how to form an ngo under any of these major categories, and ngo registrations in places all across the whole country of India.

Public Trusts

The Public Trusts are generally established for a variety of charitable purposes, such as poverty alleviation, promotion of education, healthcare services and medical relief, setting up of public recreational facilities, and other philanthropic purposes. The public trusts in India are generally irrevocable, i.e, these are generally not (or cannot be) wound up. Again, the trustees of trusts are usually life-long members, some of whom can be from one family. Public trusts are allowed to work at regional or national levels, and appointment of trustees is not made through electoral process. All trustees together form the Board of Management, which governs the public trust.

Trustees :

A public trust requires a minimum of two trustees for its formation, one Settler (who is establishing a trust), and any one person. There is no upper limit to the maximum number of trustees, and is it decided by the Board of Management. The minimal and maximal number of trustees to a trust, must be mentioned in the Trust Deed. Trustees can have popular designations like the Chairperson, Managing Trustee, etc. Here, it may be mentioned that the trustees cannot gain any remuneration from the fund of the trust, nor the profits of the trust could be distributed among the trustees.

Legislation :

In India, there is no any national law for governance of public charitable trusts. Therefore, different States of the country use different Public Trusts Acts for registration and regulation of these. In absence of a Trusts Act in any concerned State or Union Territory of India, applicable is the Indian Trusts Act of 1882, for these purposes. States like Maharashtra, Rajasthan, Gujarat, and Madhya Pradesh have their own individual Public Trusts Act. The public trusts essentially require proper registration with State authorities to be eligible for any tax-exemption.

Trust Deed :

The Trust Deed is the most important instrument for working and management of any public charitable trust. The trust deed contains detailed information about the name and address of the trust, names and addresses of all trustees, aims ad objectives of the trust, mode of management, appointment and removal of trustees, rules and regulations of the trust, and so on. This significant document is to be executed on the non-judicial stamp paper, the value of which depends on the magnitude of the property of the trust.

Application for Registration :

Registration of a public charitable trust is generally with the office of the Charity Commissioner in the concerned State. The trust deed is to be signed by the settler(s) and the trustee(s), in presence of two witnesses. The registration fee for a public trust is INR-1100/-, in most of the States of India. The whole registration process takes around a week.

Societies

A Society is a dignified association of like-minded and benevolent persons who are united together for certain social welfare, philanthropic, and charitable objectives. The main motive of these persons is sincere and constructive social service, and not to make any profits. The objectives of such societies could be literary, environmental, scientific, charitable, and many other developmental and noble purposes. These not-for-profit organizations are self-governed and apolitical in nature, and generally have a private and dependable source of income to fund their developmental and philanthropic activities. These societies can work at regional or national level, and could be dissolved under adverse circumstances. Today, the majority of NGOs in India and countries worldwide are such societies.

Legislation:

For proper and perfect registration of such societies, India has a well-developed federal law, which is represented by the Societies Registration Act of 1860. This Act is used universally in all across India for registration of social development societies. However, in some States of India, where there is a Charity Commissioner, a society also needs to be registered with the Bombay Public Trusts Act of 1950, in addition to its registration under the central Societies Registration Act of 1860.

Members:

The minimum essential number of members required for formation of a society is seven, to work in any specified regional geographical area with the native State. And, to function at the national level, a society must have at least eight managing committee members, out of whom five members should belong to different States of India). There is no upper limited placed by this Act to the maximum number of governing council members to a society, in any case. The members of the governing council generally bear the designations of President, Vice-President, General Secretary, Secretary, Joint Secretary, Treasurer, Member, etc. The governing council or managing committee is responsible for directing, supervising, regulating, and managing all activities of the society. Here, it may be noted that, the managing committee does not include more than one member from any one family. Again, a foreign national can also be a member of the governing body of a society, in addition to the usual Indian members. This fact also holds good in cases of public trusts. Besides, an unfortunate dissolution of a society, essentially requires firm approval of at least three-fifth of its all members, in favor of the dissolution. Here, it may also be inserted that members of the governing body of the society cannot draw any remuneration from the funds of the society, nor any monetary residual could ever be distributed among them.

Registration of a Society:

Registration of societies is performed with office of the Registrar of Societies in the concerned State. Proper registration of a society is pre-requisite for becoming eligible for the tax-exemption status. The registration process takes about a month, in general. The prescribed fee for society registration in all across India is just INR-50/-. The following significant documents need to be prepared and submitted to the Registrar in duplicate:

Here, it must be noted that societies (unlike trusts) are required to file an annual report every year with the Registrar of Societies in the related State, along with the names, addresses, and occupations of all members of the governing body. Again, societies are essentially required to renew their registration in every five-year period. There are fines for belated renewals. For this purpose, needed are a well filled-in-up form for renewal of registration (available at Registrar's office), a list of existing members (including any newly elected members) of the governing body, and the income and expenditure account for the current and previous years.

Not-For-Profit Companies

The Companies Act of 2013 also provides provisions for establishing not-for-profit companies (companies which were being set-up under the section-25 of the former Indian Companies Act of 1956). Such non-profit private limited companies are formed to promote works and noble objectives related with the fields of art, science, commerce, charity, religion, etc. This form of an NGO is also not entitled to distribute its profits among its members, and all income generated by it will be used in furthering its benevolent objectives. Again, like societies, but unlike trusts, these not-for-profit companies can be dissolved in some future times under adverse circumstances.

Legislation:

Now, these companies will be registered under the new Companies Act of 2013, with support of the Registrar of Companies appointed in the concerned State.

Members:

At least three individuals or trustees are essentially needed for setting up such non-profit companies, anywhere in entire India. There being no upper limit to the maximum number of permissible members. The company is run and managed privately through the Board of Directors or the Managing Committee. The members of the Board of Directors are elected procedurally by its members. The internal governance of such companies is quite similar to the societies (registered under the Societies Registration Act of 1860).

Registration:

The main documents for registration of such companies are the Memorandum of Association (MoA) and the Rules and Regulations (RR) of the company. No stamp paper is required for drafting these vital documents. The application for registration is to be filed with the Registrar of Companies in the State, and also with the Regional Director of the Company Law Board (CLB). Besides these documents, other documents required for registration are – statement of the assets, brief description about the company and its members of Board of Management, and mission and vision of the company.

Income Tax Exemption for NGOs

The Indian Income Tax Act of 1961 treats all categories of not-for-profit organizations equally regarding the tax exemptions. The facility of tax exemption is available only when all activities of an NGO are purely charitable and philanthropic, and all generated incomes (at least 85%) by the NGO are invested in such activities. In this connection, two main types of tax related exemptions are available to NGOs, these are – 12A Certificate and the 80G Certificate, granted by the Income Tax Department of India. The applicable forms for these purposes are the Form-10 and the Form-56. The 12A certificate makes the incomes of an NGO fully tax exempt; while the 80G certificate makes all donations to the NGO, exempt from taxation (this means that donors are not required to pay any tax on the amount of donation made to such an NGO). Here, it is also noteworthy that the foreign contributions to the NGOs are governed and regulated by the Foreign Contribution (Regulation) Act of 2010, of the Ministry of Home Affairs.

Special Permissions/Licenses

In addition to proper and perfect registration under the central Societies Registration Act of 1860, or any Public Trusts Act of the concerned State (such as the Bombay Public Trusts Act of 1950), or the Companies Act of 2013, an NGO also requires registration with some other State or Federal Acts, for the purposes of proper and flawless functioning and management. Some of the highly significant special permissions and licenses to be needed by an NGO in India are the following:

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