The objective of the NGO. Minimum of 7 members in the society. Hence, there is no particular upper limit for the number of members an NGO or society can have in India. Each of these members may have their own designations, which they must decide amongst themselves.
A Non-Government Organisation, which is better known as an NGO serves as a charitable organisation that works for the society’s betterment. The different types of NGOs allowed in India are, Section 8 Companies, Trusts, and Societies. The nature of the organisation depends greatly on the type of activity the applicant wishes to undertake.
The NGO is essentially an organisation that works for charitable purposes, and is hence a non-profit making organisation. It works towards the promotion of education, science, arts, sports, religion, charity and social welfare across different spheres. Since there are different types of NGOs in India, they fall under different laws, such as the Society Registration Act, Trust Act and Companies Act.
The NGOs that register as a Section 8 Company fall under the jurisdiction of the Companies Act of 2013. All the companies that fall under this category work for charitable purposes and are not-for-profit organisations. The main difference between an NGO, trust and society is that former works through a registration under the Ministry of Corporate Affair, known better as the MCA.
What To Do Before Applying for a NGO Registration
Obtain a Digital Signature Certificate (DSC)
The NGO’s proposed directors will have to provide their Digital Signatures at the time of incorporation. A digital signature is essentially an electronic way to sign and authorise registration forms that are filed online. The Indian government has entrusted various Certifying agencies to issue Digital Signature Certificates in India to allow such digital authorisation. All Directors will have to apply for and obtain either a Class 2 or Class 3 DSC from such agencies. The processing fees required will vary from one certifying agency to another, and also depend on the class of DSC required.
Once they have a DSC, applicants must apply for a Director Identification Number, or DIN. Hence, the company’s proposed directors must file application Form DIR-3 to receive a DIN from the MCA. The applicants must also upload scanned copies of supporting documents such as their PAN card, and proof of identity and address along with their application form. Applicants can submit their application form online through the Ministry of Corporate Affairs’s official web-portal. Additionally, all supporting documents must be attested by a practicing professional chartered accountant,cost accountant or company secretary.
STEPS TO REGISTER FOR NGO:
Step 1: All the proposed Directors of the NGO must first apply for and obtain a DSC. Once they have a DSC, they must then file Form DIR-3 through the MCA’s portal with the ROC to obtain a unique DIN.
Documents required for DIN application:
Applicants will have to upload copies of Identity and Address Proof documents such as the following;
- Voter’s ID
- Aadhar card
- Electricity bill not older than three months
- Driving license
- PAN card
- House tax receipt
- Business address proof
- Society’s name
Step 2: Once the DIR-3 has been approved, the respective ROC will allot a DIN to the proposed directors.
Step 3: Next, file Form INC-1 with the Registrar Of Companies to register a company name for your NGO. Applicants may send up to six name preferences as a part of their application form. The ROC will go through the list, check for availability and choose the one that is found available.
Step 4 – Once the company receive an approval from the ROC, they will have to file Form INC-12 to apply for an NGO license.
Documents required to file INC-12:
- Declaration, as per Form INC-14 from a practising Chartered Accountant
- Declaration, as per Form INC-15
- Draft Articles and Memorandum of Association as per Form INC-13
- Estimated Income and Expenditure for the next three years
Step 5 – After the form is approved, the company will receive an NGO license via Form INC-16.
Step 6 – Next, the applicant must file the SPICE Form 32 with the Registrar Of Companies to achieve incorporation. Once the ROC checks and verifies all the supporting documents, it will issue a Certificate of Incorporation. The company will also receive a unique Corporate Identification Number, better known as the CIN.
Eligibility to start an NGO
- Requires at least two directors for incorporation as a private limited company
- Requires at least three directors for incorporation as a public limited company
- Can have a maximum of 200 members if incorporated as a private company
- If incorporated as a public company, there is no limit to the number of members
- If registering as an NGO, there is no extra fee charged
DIR 12 Appointments of Directors
DIR 2 Consent of Directors
DIR 3 Application to ROC to get DIN
INC 1 Business name approval
INC 12 Applications for License
INC 13 Memorandum of Association
INC 14 Declaration from a practicing CA
INC 15 Declaration from everyone filing an application
INC 16 License to incorporate as NGO
INC 22 Situation of Registered Office
INC 7 Applications for Company’s Incorporation
INC 8 Declarations
INC 9 Affidavit from each director and subscriber
Benefits of NGO Registration
Registering a company as an NGO under the Companies Act, 2013 provides several benefits which are as follows;
Registering your company as an NGO under the Companies Act, 2013 and avail several taxation benefits for the directors of the company. NGOs are exempt from several taxes, and it helps the company save taxes and invest the saved money in further projects.
Lower Share Capital
All companies require a minimum share capital to receive a certificate of incorporation and function independently. However, it isn’t the same for NGOs as they may be funded directly through the donations they receive. Additionally, subscriptions also help the NGO support whatever projects or proceedings it has undertaken. Hence, NGOs do not require a higher share of capital to operate or function independently.
Almost all companies have a legal obligation to share their limited liability status and make it public. However, the matter varies significantly when it comes to entities registered under the Companies Act. Such companies are exempted from the use of any titles. As a result, they can function without making such a limited liability status public. This provides a significant benefit when it comes to the capital required to go public with the company.
Transfer of ownership/titles
Companies which come under the NGO category as per the Income Tax Return Act of 1961 face no restrictions regarding the transfer of ownership or claims on interests earned. However, other types of companies do not have the privilege of moving their ownership with such ease.
Stamp Duty Exemption
All NGOs as per the Income Tax Act 2013 are exempt from stamp duty, which helps the company in saving tax. All the taxes saved via such a stamp duty exemption can then be invested in the charitable cause that the company supports. The exemption of stamp duty also helps in protecting the company’s funds improving the overall efficiency and productivity of the NGO.