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Non - Profit Organisation (NGO) Registration in India

Author: Swarit Advisors
by Swarit Advisors
Posted: Nov 20, 2017

In India NGO (non-profit organizations) / public charitable organizations i.e. NGO can be registered as trusts, societies, or a private limited non-profit company, under section-8 companies. Non-profit organizations in India:

(a) Exist independently of the state;

(b) Are self-governed by a board of trustees or ‘managing committee’/ governing council, comprising individuals who generally serve in a fiduciary capacity;

(c) Produce benefits for others, generally outside the membership of the organization; &

(d) Are ‘non-profit-making’, in as much as they are prohibited from distributing a monetary residual to their own members.

  • Section 2 subsection 15 of the Income Tax Act which is applicable uniformly throughout the Republic of India – defines ‘charitable purpose’ to include ‘relief of the poor, education, medical relief & the advancement of any other object of general public utility’.
  • A public charitable purpose has to benefit a sufficiently large section of the public as distinguished from specified individuals. The Organisations which lack the public element such as trusts for the benefit of workmen or employees of a company, however numerous – have not been held to be charitable. However, the beneficiaries of the organization include an uncertain & fluctuating body of the public answering a particular description, the fact that the beneficiaries may belong to an assured religious faith or a set of persons of a certain religious persuasion, would not affect the organization’s ‘public’ character.

Formation & Registration of a Non -Profit organizations

  • Trust
  • Society
  • Section-8 Company (previous section 25)
  • Special Licensing
  • Trusts Registration
  • A public charitable trust is frequently floated when there is property involved, particularly in terms of land & building.
  • Different states in India have different Trusts Acts in force, which governs the trusts in the state; in the absence of a Trusts Act in any particular state or district, the general principles of the Indian Trusts Act 1882 are applied.
  • The main instrument of any public charitable trust is the trust deed, wherein the aims & objects & mode of management (of the trust) should be enshrined. In the trust deed, the minimum & maximum number of trustees has to be stated.
  • Society Registration
  • According to section 20 of the Societies Registration Act, 1860, the following societies can be registered under the Act charitable societies, military orphan funds or societies established in India and societies which are established for the promotion of art, science or literature for education, the circulation of useful knowledge, the diffusion of political education, the foundation or maintenance of libraries or reading rooms for general use among the members or open to the public, or public museums & galleries of paintings & other works of art, collection of natural history, mechanical & philosophical inventions, instruments or designs.
  • Section 8 Company
  • As per the Sec 8 of the Companies Act, 2013, such company can be established ‘for promoting commerce, art, science, religion, charity or any other useful object’, provided the profits, if any, or other income is applied for promoting the objects of the companies & no dividend is paid to its members.
  • Section-8 companies are registered under section 8 of Indian Companies Act 2013 (old section-25 of the Indian Companies Act, 1956) & the main instrument is a Memorandum & articles of association.
  • Special Licensing
  • In addition to registration, a non-profit engaged in certain activities might also require special license/permission. Some of these include (but are not limited to).

A place of work in a restricted area (like a tribal area or a border area requires a special permit – the Inner Line Permit – usual issues either by Ministry of Home Affairs & by the relevant local authority i.e., district magistrate. To open an office & employ people, the Ngo should be registered under the Shop & Establishment Act. The intended employee also needs a work visa. The foreign firm with non-profit reason setting up an office in India & wanting staff from abroad needs to be registered as a trust/society/company, needs permission from the Reserve Bank of India & also a No Objection Certificate from the Ministry of External Affairs.

About the Author

SwaritAdvisors.com is technology motivated platform establishing the specialized legal services in India. We are dedicated to helping startups in solving legal compliance related to starting and running their business.

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Author: Swarit Advisors

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