Process of Registering Your NGO in India: Trust, Society, Section 8 Company

We explain how to register your NGO in India, including the steps for setting up a Trust, Society, and Section 8 Company, and their respective benefits.

Based on the type of NGO registration – Trust, Society, or section 8 company – an applicant needs to follow various laws and procedures prescribed in respective Acts. We discuss them below. 

Previously, we listed the legal and financial benefits of registering as an NGO in India and the tax status of non-profit organizations in the country: What Are the Benefits of Registering as an NGO in India?

NGO registration procedure for a Trust

The procedure for Trust registration involves the below steps:

1. Select an appropriate name
2. Drafting of Trust deed
3. Selecting settlers and trustees of the Trust
4. Preparing Memorandum of Association
5. Paying the requisite fees
6. Collection of a copy of Trust deed
7. Submission of the Trust deed with the Registrar
8. Obtain the registration certificate

Benefits of registering as a Trust  

• Trusts can get land from the government
• There is no federal law that governs public charitable trusts in India. However, it is important to note that some Indian states, such as Madhya Pradesh, Maharashtra, Gujarat, and Rajasthan do have a Public Trusts Act.
• An NGO registered under the Trusts Act can bring into practice the word “Govt. Regd.” or ‘Regd.’
• Avail tax benefits.
• 80G certificate advantage under the Income Tax Act.
• Trusts can get white capital – money or other assets owned by a person or organization or used for starting a company or investing for building construction.
• Benefits under Goods & Service Tax (GST)

NGO registration process for a Society

For NGO registration as a Society, the founding members must first choose – a unique name for the Society and prepare the memorandum of the Society.

1. Choosing a name for Society

While selecting a name for the Society, it is essential to keep in mind that as per the Societies Act, 1860, the name should be unique and non-identical. Further, the name proposed by the applicant must not suggest patronage of the Government of India or any State Government or attract the provisions of Emblem and Names Act, 1950.

2. Preparing the Memorandum of a Society

While registering the society, an applicant shall prepare the Memorandum of Society. The Memorandum of the Society along with the Rules and Regulations of the Society must then be signed by each of the founding members, witnessed by:

• An Oath Commissioner;
• Notary Public;
• Gazetted Officer;
• Advocate;
• Chartered Accountant; or
• Magistrate 1st Class with their official stamp and complete address.

3. Prepare documents

An applicant shall prepare the below-mentioned documents required for Society registration. The documents shall be duly signed.

• Name of the society
• Address proof of the working space
• Identity proof of all the members
• 2 copies of the Memorandum of Association and by-laws of the Society

4. Filing of application

An applicant shall file the signed Memorandum and Rules and Regulations with the concerned Registrar of Societies in the State with the prescribed fee.

5. Get Society certification

Once the documents are submitted and the Registrar is satisfied with application for Society Registration, they would certify to deem the Society to be registered.

Benefits of registering as a Society

NGOs registering under the Society Registration Act, 1860 can avail the following benefits:

Exemption from income tax: Society registration is a kind of NGO registration where the firm is saved from paying income taxes.

Separate legal identity: An NGO is a separate legal entity in the eyes of the law. A separate legal entity is a The entity has its own legal rights and obligations, separate to those running and/or owning the entity.

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Limited liability: Since the Society is a separate legal entity from its members, the liability of its members is limited to their share only. This means that under no circumstances can the members’ assets be utilized to pay the organization’s liabilities. Also, each member of the Society is accountable for their own individual actions only. In other words, members of a Society are responsible only for the activity undertaken by them and not by other members.

Legal protection: You will be provided with legal protection once you have registered your society under the Society Registration Act, 1860. It indicates that no other company or persons can use your organization’s name, your assets, etc.; they will be subject to punishment if found liable for any violation. 

NGO registration process for a Section 8 Company

For NGO registration as a Section 8 Company, an applicant needs to follow the below steps:

1. Apply for Digital Signature Certificate (DSC)

The very first step is to apply for the Digital Signature Certificate. DSC is used for affixing the signature in the electronic forms.

2. Name reservation through SPICE+

The procedure for name reservation of a Section 8 Company is similar to other companies. For the same, click on the ‘SPICe+’ Form placed under ‘MCA Services’. SPICE+ form is used for name reservation of the company that includes all the steps right from the name reservation to post-incorporation compliances.

The applicant of a Section 8 Company must fill the name they want to reserve for the organization. The name shall include a term/label or one similar to it from the below list:

• Federation;
• Chambers;
• Foundation;
• Forum;
• Association;
• Confederation; or
• Council, etc.

3. Submission of SPICE+ Part A form

The applicant needs to submit the SPICE+ Part A form for name reservation and incorporation purposes. (DIN Application is also included in the SPICE+ form).

4. Filing SPICE+ Part B

After submitting the SPICE+ Part A, the next step is to download SPICE+ Part B in PDF for incorporation. The related forms are-

• SPICe+AoA
• SPICe+MoA
• AGILE PRO
• INC-9 and URC-1 and for affixing the “DSC”

5. Preparing MOA and AOA

After the proper filing of the SPICE+ form, an applicant must file MOA and AOA form. All the details, which are common in PART-B, will be auto-fill in MOA and AOA. Both the forms are web-based forms.

An applicant is required to fill in all the details in the MOA/ AOA as per the requirement of Schedule I. Also, affix the Digital Signature Certificate of all the subscribers and professional on the portal for the same.

6. Filing the details in AGILE PRO

The next step is to fill all the details in the AGILE PRO form. Like Part A, the details that are common in PART-B shall be auto filled in AGILE PRO. AGILE PRO includes:

• GST- Optional
• EPFO/ ESIC – mandatory
• Bank account – opening the bank account through this form

7. Fill requisite details in INC-9

INC-9 includes the declaration by the subscriber or First Director.

8. Filing of forms with MCA

An applicant shall file the respective forms with the Ministry of Corporate Affairs / MCA after filling all the requisite details in SPICE+ and AGILE PRO. After successful submission, the documents can be submitted, and DSC can be affixed in the respective form.

9. Pre-scrutiny check and payment of requisite fees

The next step to be followed is to do a pre-scrutiny check. After a successful pre-scrutiny check, the applicant must click on the confirmation button. Also, the applicant company is required to pay a requisite fee for “Section 8 Company” registration.

10. COI from the Registrar

If the Registrar finds the information and the documents appropriate – they will issue a Certificate of Incorporation to the applicant company.

Benefits of Section 8 Company registration

NGOs registering themselves as section 8 companies can gain various advantages. We discuss them briefly below:

No minimum capital requirement: There is no minimum capital requirement for creating an NGO as a section 8 company. Unlike other corporate entities, such as a public/private limited company, Section 8 companies have no prescribed limit for any minimum capital necessities.

Separate legal entity: Comparable to the Trust, a section 8 company also gets the special recognition of being a ‘separate legal entity.’ Like private limited and other limited companies, a section 8 company, too, continues its own identity and possesses its separate legal entity from its members.

Tax exemptions: Since section 8 companies are a form of a non-profit organization, they can avail several tax exemptions if it registers under the Section 80G of the Income Tax Act, 1961Exemption of Stamp duty for registration.

No title needed: The certification u/s 80G helps donors reduce their tax liability by 100 percent or 50 percent on the amount donated, depending on the nature of activities undertaken by the Trust/NGO.

Not Required to Add The Suffix: Section 8 Companies are not required to add the suffix Limited or Private Limited at the end of their name.

Security of ownership or title transfer: As per section 8 of the Income Tax Act of 1961, people can transfer the ownership of both movable and immobile assets externally with no restrictions. Apart from the above-described advantages, there are many other advantages of a section 8 company registration, such as attending general meetings under a short notice period, which is within 14 days rather than 21 days, and many more.

Dezan Shira & Associates can help you set up your NGO in India and stay compliant with our advisory services. For more information, you may reach us at india@dezshira.com 

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