How to Start an NGO in India – Society, Trust, and Section 8 Company Registration

An NGO (Non-Governmental Organization) is a non-profit, voluntary organization that works for social welfare, charity, education, health, environmental protection, human rights, and various other causes without the primary objective of making profits. NGOs play a crucial role in India's social development, complementing government efforts in areas where public resources may be inadequate.

In India, an NGO can be registered under three primary legal structures, each governed by different laws and suitable for different purposes:

1. Society: Registered under the Societies Registration Act, 1860, a society is a membership-based organization with a governing body (managing committee) elected by its members. Societies are suitable for NGOs that wish to have a democratic structure where members have voting rights and can participate in the organization's governance. In West Bengal, societies are registered with the Registrar of Societies, West Bengal, under the West Bengal Societies Registration Act, 1961, which replaced the central Act in the state. A minimum of seven members is required to form a society, and the members must subscribe to a memorandum of association and rules and regulations.

2. Trust: Registered under the Indian Trusts Act, 1882 (for private trusts) or relevant state legislation, a trust is a legal arrangement where the founder (settlor) transfers property to trustees for the benefit of beneficiaries. Trusts are simpler to manage than societies and are suitable when a small group of trustees (minimum two) wishes to manage the organization. In West Bengal, public charitable trusts are governed by the Indian Trusts Act, 1882, and the West Bengal Estates Acquisition Act, 1953, for matters relating to charitable endowments. The trust deed is the primary governing document, and there are no members — only trustees who manage the trust.

3. Section 8 Company: Registered under the Companies Act, 2013 (Section 8), a Section 8 company is a company with charitable objects that applies its profits, if any, to promoting its objects and prohibits the payment of dividends to its members. This structure offers greater credibility, transparency, and regulatory oversight. Section 8 companies are registered with the Registrar of Companies (ROC) and are governed by the Companies Act. A minimum of two directors and two shareholders (for a private company) is required. This structure is preferred by NGOs that seek higher credibility with donors, government agencies, and international organizations.

Registering a society in West Bengal is governed by the West Bengal Societies Registration Act, 1961. Here is the complete procedure:

Step 1: Choose a Name. Select a unique name for the society that does not resemble the name of any existing registered society. The name should reflect the society's objectives and should not contain words suggesting government patronage. You can check name availability through the Registrar of Societies, West Bengal. Names containing words like "National," "Indian," "Bharat," or "West Bengal" may require specific approvals.

Step 2: Gather Desirous Persons. A minimum of seven persons (the desirous persons) who subscribe their names to the Memorandum of Association is required. These persons should be competent to contract (over 18 years of age, of sound mind, and not disqualified by law). At least three of these persons must be residents of West Bengal.

Step 3: Draft the Memorandum of Association (MoA) and Rules & Regulations. The MoA must contain: name of the society, registered office address (within West Bengal), objects of the society, and names, addresses, and occupations of all desirous persons (with their signatures). The Rules and Regulations must contain: composition of the governing body, election/removal of members of the governing body, procedure for meetings, quorum requirements, maintenance of accounts and audit, sources of income and utilization of funds, procedure for amendment of rules, and dissolution procedure.

Step 4: Execute the Documents. The MoA must be signed by all seven desirous persons in the presence of witnesses. It must be executed on non-judicial stamp paper of appropriate value (typically Rs. 100-500) or franked. The signatures of the desirous persons must be witnessed by a Notary Public, Advocate, or Gazetted Officer.

Step 5: Submit the Application. The application must be submitted to the Registrar of Societies, West Bengal (located at the Office of the Registrar of Societies, West Bengal, New Secretariat Building, 1 K.S. Roy Road, Kolkata 700001) along with: Memorandum of Association (3 copies), Rules and Regulations (3 copies), affidavit from the President/Secretary affirming the correctness of information, address proof of the registered office (rent agreement, NOC from landlord, and utility bill), identity proof and address proof of all desirous persons, and list of members of the first governing body.

Step 6: Pay the Registration Fee. The registration fee is approximately Rs. 500-1,000 depending on the nature and objects of the society. The fee must be paid through a treasury challan.

Step 7: Verification and Registration. The Registrar scrutinizes the documents, and if satisfied, issues the Certificate of Registration. The registration process typically takes 30-60 days. Once registered, the society becomes a legal entity with perpetual succession, a common seal, and the right to acquire, hold, and transfer property.

Registering a public charitable trust in Kolkata involves executing and registering a trust deed. Here is the procedure:

Step 1: Identify the Author/Settlor and Trustees. The author (also called the settlor) is the person who creates the trust and transfers property to it. A minimum of two trustees is required, though more are generally appointed for better governance. The author and trustees must be competent to contract and should not be disqualified under any law.

Step 2: Draft the Trust Deed. The trust deed is the primary governing document and must contain: name of the trust, names and addresses of the author/settlor and all trustees, objects of the trust (specifically and clearly defined charitable purposes), details of the trust property (immovable property, if any, or the initial corpus contributed by the author), powers, duties, and responsibilities of trustees, procedure for appointment and removal of trustees, procedure for meetings and decision-making, rules for investment of trust funds, maintenance of accounts and audit, and amendment and dissolution procedure.

Step 3: Execute the Trust Deed. The trust deed must be executed on non-judicial stamp paper of appropriate value (determined based on the value of the trust property). The author and all trustees must sign the trust deed in the presence of at least two witnesses. If immovable property is being transferred to the trust, the trust deed must be registered with the Sub-Registrar of Assurances under the Registration Act, 1908.

Step 4: Register the Trust Deed. The trust deed must be registered with the Sub-Registrar of Assurances having jurisdiction over the area where the trust's registered office is located. In Kolkata, Sub-Registrar offices are located in various areas including Alipore, Bhowanipore, Maniktala, and Cossipore. Registration involves: presenting the original trust deed (on stamp paper) along with copies, payment of registration fee (1% of the value of trust property for immovable property, subject to a maximum), identity proof and photographs of the author, trustees, and witnesses, and address proof of the registered office. After verification, the Sub-Registrar endorses the registration on the trust deed and returns it to the parties.

Step 5: Obtain PAN and Bank Account. Apply for a PAN card in the name of the trust. Open a bank account in the name of the trust with a scheduled bank. The bank will require the trust deed, PAN card, Certificate of Registration (if the trust deed is registered), and KYC documents of the trustees.

A Section 8 company is registered with the Registrar of Companies (ROC), Kolkata, under the Companies Act, 2013. This structure offers the highest level of regulatory oversight and credibility.

Step 1: Apply for Digital Signature Certificates (DSC). All proposed directors must obtain Class 3 Digital Signature Certificates from a licensed Certifying Authority such as eMudhra, Sify, or NSDL.

Step 2: Obtain Director Identification Numbers (DIN). Apply for DIN for all proposed directors through Form DIR-3 on the MCA portal (mca.gov.in). DIN is mandatory for all directors of Indian companies.

Step 3: Apply for Name Approval. File Form INC-1 (now RUN — Reserve Unique Name) on the MCA portal to reserve the company name. The name must end with words such as "Foundation," "Forum," "Association," "Federation," "Chamber," "Confederation," "Council," or "Electoral Trust." The name must reflect the charitable objects and must not be identical or similar to an existing company or trademark.

Step 4: Draft the Memorandum of Association (MoA) and Articles of Association (AoA). The MoA and AoA must be drafted in Form INC-13 (for MoA) and Form INC-31 (for AoA) as per the format prescribed for Section 8 companies. The MoA must specify: name of the company, state in which the registered office is located (West Bengal), main objects (charitable purposes), ancillary objects, and a declaration that the company intends to apply its profits, if any, in promoting its objects and prohibits payment of dividends. The AoA must contain the regulations for the management of the company.

Step 5: Apply for License Under Section 8. File Form INC-12 along with the MoA and AoA, a declaration by a Chartered Accountant or Advocate, estimated income and expenditure for the next three years, and details of the proposed directors with the ROC Kolkata. The ROC issues a license under Section 8 after being satisfied that the company's objects are genuinely charitable and that the company intends to apply its profits to its objects.

Step 6: Incorporate the Company. After receiving the Section 8 license, file Form INC-7 (application for incorporation) along with the MoA, AoA, declaration by directors (Form INC-9), and address proof of the registered office. The ROC issues the Certificate of Incorporation, and the Section 8 company comes into existence.

The entire process for Section 8 company registration typically takes 30-60 days and costs between Rs. 25,000 to Rs. 50,000 including professional fees and government charges.

Tax exemptions are crucial for NGOs as they enable the organization to retain more funds for its charitable activities and incentivize donors to contribute. The three main tax-related registrations are:

Section 12A Registration (Income Tax Exemption): Registration under Section 12A of the Income Tax Act, 1961, exempts the NGO's income from taxation. Without 12A registration, the NGO would be liable to pay income tax on its surplus or income like any other entity. The application for 12A registration is filed in Form 10A with the Commissioner of Income Tax (Exemptions), Kolkata. Key documents required include: Certificate of Registration (society, trust, or Section 8), MoA and Rules/Trust Deed, PAN of the NGO, audited accounts for the last three years (if applicable), list of governing body members/trustees, and annual activity report. Once granted, 12A registration is valid until withdrawn and requires the NGO to file its Income Tax Return (ITR-7) annually.

Section 80G Registration (Donor Tax Deduction): Registration under Section 80G of the Income Tax Act allows donors to claim a deduction from their taxable income for donations made to the NGO. The deduction is either 50% or 100% of the donated amount, subject to qualifying limits. The application for 80G registration is filed in Form 10G with the Commissioner of Income Tax (Exemptions). In addition to the documents required for 12A, the application requires: a statement of activities showing that the funds are utilized for charitable purposes, details of the governing body and their relationship with the organization, and an undertaking to comply with the conditions of 80G. As per the recent amendments, 80G registration is now valid for a specific period (normally 3-5 years) and must be renewed.

FCRA Registration (Foreign Contributions): If the NGO intends to receive foreign contributions (funds from foreign sources including foreign individuals, companies, trusts, or governments), registration under the Foreign Contribution (Regulation) Act, 2010, is mandatory. FCRA registration is granted by the Ministry of Home Affairs, Government of India. The key requirements include: the NGO must have been in existence for at least 3 years and must have spent at least Rs. 10 lakh on its objects in the preceding 3 years (for FCRA registration; lesser threshold applies for prior permission), the NGO must have a designated FCRA bank account with the State Bank of India, New Delhi Main Branch (Sansad Marg), the application is filed online through the FCRA portal (fcraonline.nic.in) in Form FC-3A, and comprehensive activity reports, audited accounts, and governance details are required. FCRA registration is typically valid for 5 years and must be renewed 6 months before expiry. Non-compliance with FCRA regulations can result in suspension or cancellation of registration and criminal prosecution.

Running an NGO in India involves ongoing compliance obligations that must be met to maintain registration and tax exemptions:

Annual Filings for Societies and Trusts: Societies registered in West Bengal must file an annual list of governing body members with the Registrar of Societies. The annual general body meeting must be held, and minutes must be maintained. Audited annual accounts must be prepared and submitted to the Registrar if required under the rules. Trusts must file annual returns with the Income Tax Department and maintain proper books of accounts.

Annual Filings for Section 8 Companies: Section 8 companies must file: Form AOC-4 (financial statements) and Form MGT-7 (annual return) with the ROC annually, Form DIR-3 KYC for all directors, and any changes in directors must be reported through Form DIR-12. The board must meet at least four times a year, with no more than 120 days between two consecutive meetings, and the first board meeting within 30 days of incorporation.

Income Tax Filings: All NGOs with 12A registration must file ITR-7 annually, even if the income is fully exempt. The return must include the audited financial statements. The audit must be conducted by a Chartered Accountant. Failure to file ITR can result in penalties and cancellation of 12A registration.

FCRA Compliance: NGOs with FCRA registration must file annual returns in Form FC-4 with the Ministry of Home Affairs through the FCRA portal. The return must include: details of foreign contributions received and utilized, balance in the FCRA bank account, audited statement of accounts, and assets created from foreign contributions. FCRA funds must be utilized only for the purposes for which they are received, and administrative expenses are capped at 20% of total foreign contributions. Any change in the office bearers, address, or bank account must be reported to the MHA.