Statutory obligation, Legal Procedure for establishment of NGO, Online & Offline, NGO Registration process, Documentation, Eligibility to start an NGO

Different types of NGO Laws in India

The following laws would be applicable for NGO registration in India:

Trust: It is a public charitable institution registered under the Charity Commissioner’s office having jurisdiction over the state. Maharashtra has adopted the Bombay Public Trust Act, 1950, which has become a model for the various other states. The law that regulates trusts are the Indian Trusts Act, 1882.

Societies: According to the Societies Registration Act, 1860, states have adopted their version from the model Societies Act, 1860. A society is considered as an independent form of organization. It has broad membership, which elects a governing body periodically for managing the affairs of the society. The body is accountable to members. There are multiple types of societies that may be registered under the Act which includes:

• Charitable societies;
• Societies which are established for the promotion of science, literature, or fine arts, education; and
• Public Art Museums, and galleries, and certain other types of museums.

Company: A Company has been described under the Companies Act, 2013. The Act permits “Section 8 companies” to be formed. According to the Act, Section 8 Companies are those which are formed for the purpose of art, religion, charity, and other useful objects. Internal governance of Section 8 Company is similar to that of a society. The members of the committee or governing council are elected by the members of the Charitable Company. A section 8 company can be dissolved. The registration process takes time and requires the memorandum of association and articles of association that has to be submitted with the ROC (registrar of companies).

Trade Union: According to the Trade Union Act, 1926, a Trade Union is defined as temporary or permanent combination formed to regulate and control the relations of employees and employers.

Multi-State Co-operative Societies: The Multi-State Co-operative Societies Act, 2002 has substituted the previous Act of 1984. The Act provides for the compliance of both primary and federal co-operatives.

Legal compliances of NGO

There are various legal compliances of the NGO are as follows:

• Permanent Account Number (PAN): This is a unique alphanumeric combination issued to all the juristic entities- identifiable under the Income Tax Act, 1961. The PAN number is used as the national identification number.
• Tax Deduction Number (TAN): It is the Tax Deduction and Collection Account Number. It is a ten digit alpha-numeric number required to be obtained by all the individuals who are responsible for deducting or collecting tax (TDS) at source. The TAN number is required to be quoted at the following places:

1. A challan depositing the tax so deducted,
2. A certificate issued against the tax deducted,
3. All returns furnished in respect of the tax deducted at source, etc.

Legal Procedure for establishment of NGO, Online & Offline

Non-Governmental Organization (NGO) is an entity that works for charitable purposes. NGO is known as a not-for-profit making organization that works towards the promotion of arts, science, sports, education, research, social welfare, religion, charity, and more. NGOs in India are of various types which are registered under Trust Act, Society Registrations Act, or the Companies Act.

NGO is registered in the form of Section 8 Company under the Companies Act, 2013. Companies registered under this act are all not-for-profit and charitable trusts. The only difference between a trust or society and NGO is that the latter is registered under the Ministry of Corporate Affairs (MCA).

Before Applying for NGO Registration

Obtain Digital Signature Certificate (DSC)

Proposed directors are supposed to provide Digital Signatures, as the registration forms are to be digitally signed before filing the form online. Certifying agencies under the Government of India issue Digital Signature Certificate (DSC). Applicants need to obtain either Class 2 or Class 3 category of DSC. The fees for obtaining DSC vary and depend on the certifying agency.

Apply for Director Identification Number (DIN)

Applicants are required to apply for a DIN for the proposed directors of the company. Filling of application Form DIR-3 helps in the allotment of DIN. Scanned documents like self-attested copies of PAN, identity, and address proof of directors are to be submitted along with the application form. The application form can be submitted online on the Ministry of Corporate Affairs (MCA) portal. The documents are required to be attested by a practicing chartered accountant, company secretary, or cost accountant.

Steps to Register as an NGO

Step 1: The applicant needs to obtain a DSC of the proposed Directors of an NGO. After a DSC is obtained, file Form DIR-3 with the ROC to get a DIN.

Documents to attach for DIN application:

    Identity and Address Proofs: Passport, Voter’s ID card, Aadhar card, electricity bill, driving license, PAN card, house tax receipt, business address proof, society’s name, etc.

Step 2: After the approval of DIR-3, the respective ROC will allot a DIN to the proposed directors.

Step 3: Next the applicant needs to file Form INC-1 with the ROC to apply for a company name. Preference of 6 names can be applied from which one would be allotted by ROC, depending on the availability.

Step 4: After the approval from ROC, file Form INC-12 to apply for a license for an NGO

Documents to attach with INC-12:

• Declaration, as per Form INC-14 (Declaration from CA)
• Declaration, as per Form INC-15
• Draft Article of Association (AOA) and Memorandum of Association (MOA) as per Form INC-13
• Estimated Income & Expenditure for next 3 years

Step 5: After the Form’s approval, the NGO license will be issued in Form INC-16.

Step 6: After the applicant has obtained the NGO license, he/she needs to file SPICE Form 32 with ROC for incorporation. After the ROC has checked and verified the documents, it issues a Certificate of Incorporation with a unique Corporate Identification Number (CIN).

Eligibility to Start an NGO

• Minimum 2 directors required if NGO is to be incorporated as a private limited company
• Minimum of 3 directors required, in case of incorporation as a public limited company
• The maximum number of members is 200, in the case of a private limited company
• No member limit in case of a public limited company
• No fee is charged if registering as an NGO

Forms Required for NGO Registration

• 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 each person making the 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