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How to Form an NGO in India: Legal Provisions, Benefits, and Tax Exemptions
Non-Governmental Organizations (NGOs) play a crucial role in social development and welfare. In India, NGOs can be registered under three legal structures:
- Section 8 Company (under the Companies Act, 2013)
- Society (under the Societies Registration Act, 1860)
- Trust (under the Indian Trusts Act, 1882 or relevant state laws)
This blog provides a step-by-step guide on the legal provisions, documentation, benefits, and tax exemptions applicable to these entities.
Cost Analysis
1. Section 8 Company
A Section 8 Company is a non-profit entity registered under the Companies Act, 2013. Such companies promote charitable objectives related to art, commerce, science, education, research, social welfare, religion, or environmental protection.
Legal Provisions
- Governed by Section 8 of the Companies Act, 2013
- Regulated by the Ministry of Corporate Affairs (MCA)
Benefits
- Limited liability for members
- No requirement for minimum capital
- Better credibility than a trust or society
- Eligible for tax exemptions under Income Tax Act, 1961
Documents Required
- Director Identification Number (DIN) of all directors
- Digital Signature Certificate (DSC) of all directors
- PAN & Aadhaar Card of directors
- Address proof of directors (passport, voter ID, or driving license)
- Passport-sized photographs
- Address proof of the registered office (rent agreement or ownership proof)
- No-Objection Certificate (NOC) from the owner of the premises
- Memorandum of Association (MoA) and Articles of Association (AoA)
2. Society
A Society is a group of individuals united for a common non-profit purpose under the Societies Registration Act, 1860.
Legal Provisions
- Societies are governed under the Societies Registration Act, 1860, or respective state laws.
- At least 7 members are required to register a society.
Benefits
- No minimum capital requirement
- Suitable for large memberships and governance
- Greater transparency and democratic functioning
- Can receive government grants and foreign funding (with FCRA approval)
Documents Required
- PAN & Aadhaar of all founding members
- Memorandum of Association (MoA) outlining objectives and regulations
- Rules & Regulations document
- Address proof of the society’s registered office
- No Objection Certificate (NOC) from the landlord
- Covering letter signed by all members
- Declaration by the President of the society
3. Trust
A Trust is an entity where a settlor transfers property to trustees for charitable purposes. It is governed by the Indian Trusts Act, 1882 (private trusts) or state-specific laws (public trusts).
Legal Provisions
- Indian Trusts Act, 1882 (for Private Trusts)
- Public Trusts Act of respective states (for Public Charitable Trusts)
- Minimum two trustees required (no upper limit)
Benefits
- Simple registration process with lower compliance
- Suitable for religious, educational, and social welfare initiatives
- Assets of the trust are protected and managed as per the Trust Deed
- Can obtain tax exemptions under 12A and 80G of the Income Tax Act
Documents Required
- Trust Deed (executed on non-judicial stamp paper)
- PAN & Aadhaar of settlor and trustees
- Address proof of registered office
- NOC from the premises owner
- Passport-sized photographs of all trustees
Income Tax Exemptions for NGOs
Once registered, NGOs must apply for tax exemptions under the Income Tax Act, 1961:
- 80G Certificate – Allows donors to claim tax deductions.
- 12A Registration – Exempts NGOs from income tax.
- FCRA Registration (if foreign funding is involved) under Foreign Contribution Regulation Act, 2010.
Conclusion
NGOs can be formed as Section 8 Companies, Societies, or Trusts, each having its own legal provisions, benefits, and compliance requirements. Once registered, NGOs must ensure proper tax compliance by obtaining 80G and 12A exemptions.