The term ‘Non-governmental organisation’ or NGO Has been in existence for decades. In the early days, these organisations were mostly localisation and started by religious groups. According to the World Bank, there are broadly two types of NGOs – operational and advocacy.
An NGO has a charitable objective for the betterment of society in general. It can be started as a trust or society or a non-profit company depending on the activity it wishes to undertake. In India, an NGO is considered to be an umbrella term for all non-profit organisations including trust society and Section 8 companies. Many names are given to such nonprofit organisations as ‘Sangathan’, ‘Sangam’, ‘Sangh’. The Income Tax Department also exempts all non-profit NGOs.
Benefits
There are various benefits to registering an NGO in India. Some of which include:
- An organisation that is registered as an NGO can reinforce the ethical social and legal norms of the society
- The basic requirement for running NGOs is to have a bank account under its name. In order to open an account, it is compulsory to be registered as a trust, society or Section 8 company.
- A registered NGO gains legal status and becomes accountable for the funds that it has received. For example, when an individual donates funds to a Charitable Trust, it is received under the name of the organisation and is used for the trust’s activities. In the case of an unregistered firm, the asset can be received under anyone’s name and may be used for their own profit.
- Registration of an NGO is required in order to seek tax exemption from the Income Tax Authority.
Registration procedure
Trust
One of the ways and within which you can be registered is called crashed or more commonly known as Charitable Trust. Trust is a legal entity created by the ‘trustor’ or ‘settlor’ who transfers the assets to the second party or ‘trustee’ for the benefit of the third party or beneficiary. These tasks are formed to help and support the deprived sections of the society. Any group of individuals can easily register for trust in India because there are no specific laws to govern public trust. However, some states like Tamil Nadu and Maharashtra have their own Public Trust Act.
For the registration of trust the following papers are compulsory:
- Bill of electricity or water that States the address needed for registration
- Proof of identity of at least two members of the company. The proof can be a voter ID card, driver’s licence, Aadhar card, passport.
Societies
A society is a type of entity that can be created by a group of individuals united in the cause for promoting Arts, Science, literature, social welfare, and useful information. Moreover, societies work for creating military orphan funds and maintaining public museums and libraries. Societies are governed under the Societies Registration Act, 1860. They must be registered with the respective State Registrar of Societies in order to be eligible for tax exemption.
For the registration of society the following papers are essential:
- name of society
- address proof of the office
- proof of identity of all the nine members. The proof can be a driving licence, passport, voter ID, Aadhar card.
Section 8 Company
A Section 8 company is similar to trust and society. The objectives of a Section 8 company is to promote commerce, science, art, sports, social welfare, charity, religion, and environmental protection. They are registered under the Companies Act, 2013 for charitable purposes and have better credibility among government bodies, donors and other stakeholders.
For the registration of Section 8 company, it is necessary to have the following documents:
- Name of the company for approval
- proof of address of the office
- identity proof of the directors. the proof can be a driving license, passport, voter ID, Aadhar card.
