NGO Compliance in India – Complete Guide

1. What is an NGO?

A Non-Governmental Organization (NGO) is a non-profit entity formed to pursue social, charitable, educational, religious, or environmental objectives without profit motive.

NGOs can be registered as:

• Trust – under Indian Trusts Act or state public trust laws

• Society – under Societies Registration Act, 1860

• Section 8 Company – under Companies Act, 2013

2. Legal Framework

Tax Exemption & Donations

• Income Tax Act, 1961: Sections 12A, 12AA & 80G

• FCRA, 2010: For NGOs receiving foreign contributions

3. Documentary Requirements for NGO Registration

A. Trust-Based NGO

• Trust Deed on stamp paper (signed by settlor & trustees)

• Identity & address proofs of settlor and trustees

• Proof of property / initial corpus

• PAN card of trust (mandatory)

• NOC from property owner (if donated)

• Witness signatures (2)

B. Society-Based NGO

• Memorandum of Association (MOA) & Rules & Regulations

• Minimum 7 members (Societies Registration Act)

• Identity & address proofs of members

• PAN card of society

• Proof of registered office

• Board resolution authorizing registration

C. Section 8 Company NGO

• MOA & AOA with social objectives

• Minimum 2 directors (Private) / 3 directors (Public)

• Name approval via MCA (INC-1 / RUN)

• PAN & DIN of directors

• DSC (Digital Signature Certificates)

• Filing via SPICe+ (INC-12) for license

4. Step-by-Step NGO Compliance Process

Step 1: Draft Governing Documents

• Trust Deed / MOA & Rules / MOA & AOA for Section 8 company

• Clearly define objectives, powers, and governance structure

Step 2: Registration

• Trust: Sub-Registrar / Charity Commissioner

• Society: Registrar of Societies

• Section 8 Company: ROC via SPICe+ / INC-12

Step 3: Apply for PAN & Bank Account

• PAN mandatory for financial transactions

• Open dedicated bank account in NGO name

Step 4: Tax Exemption Registration

• 12A / 12AA Registration – Income tax exemption

• 80G Certificate – Donor tax benefit

• File applications along with trust/society/company registration documents

Step 5: FCRA Registration (If foreign funds)

• Mandatory for NGOs receiving foreign donations

• Registration valid for 5 years, renewable

• Annual FC-3 reporting to Ministry of Home Affairs

5. Ongoing NGO Compliance

6. Governance Advisory Draft (For Trustees/Directors)

Trustee / Board Duties Draft:

1. Act in good faith for the NGO objectives

2. Maintain transparency & accountability in finances

3. Approve annual budgets & accounts

4. Ensure compliance with IT Act, FCRA, Companies Act / Societies Act

5. Avoid conflict of interest or personal benefit

6. Conduct regular meetings & maintain minutes

7. Ensure proper utilization of funds for charitable purposes

8. Submit annual reports and financial statements on time

7. Common Mistakes & Advisory Notes

• Using personal accounts for NGO funds

• Delayed filing of IT returns and 12A/80G applications

• Ignoring FCRA registration for foreign donations

• Improper documentation of donations & expenses

• Not conducting or recording board/trustee meetings

• Failure to maintain audit records

Advisory:

• Maintain separate bank accounts for corpus & donations

• Use accounting software for transparency

• Keep audit-ready financial statements at all times

• Adopt internal controls & compliance calendar

8. Compliance Checklist (NGO Ready-to-Use)

• Governing documents (Trust Deed / MOA & Rules / MOA & AOA)

• Registration certificate (Trust / Society / Section 8 Company)

• PAN card & dedicated bank account

• 12A / 12AA registration

• 80G certificate for donors

• FCRA registration (if foreign funds)

• Annual accounts & audit

• ITR-7 filing

• Board / Trustee meetings & minutes

• Renewal of 12A / 80G / FCRA approvals

• Compliance calendar & internal audit

9. Key Penalties for Non-Compliance

• Delay in IT filing → Penalty under IT Act

• FCRA non-compliance → Fine or license cancellation

• Non-maintenance of accounts → Legal issues with Charity Commissioner

• Misuse of donations → Civil & criminal liability

10. Strategic Considerations

• Section 8 company → More credibility, easier grant applications

• Trust or Society → Faster formation, less formalities

• Maintain auditable accounts for funding credibility

• Conduct internal review annually to ensure compliance

• Plan donation campaigns only after 12A / 80G registration

11. Templates Provided by Filing By

1. Trust Deed / MOA & Rules / Section 8 Company MOA Draft

2. Board/Trustee Resolution Templates

3. Donation Receipt Templates (80G compliant)

4. Annual Accounts & Audit Templates

5. Compliance Calendar & Checklist

12. Why Choose Filing By?

• End-to-end NGO registration & compliance service

• Expert legal and accounting support

• All documentation & advisory drafts ready-to-use

• Fast processing & transparent pricing

• Guidance for 12A/80G/FCRA and annual filings

Additional Information on NGO Compliance in India

1. Types of NGOs & Advanced Compliance Considerations

2. Foreign Funding & FCRA Compliance

• NGOs receiving foreign funds must register under FCRA, 2010.

• Key steps:

  • Apply for FCRA registration (valid 5 years)

  • Maintain separate bank account for foreign contributions

  • Submit FC-3 annual report to Ministry of Home Affairs

• Violations may lead to:

  • Fines

  • Freezing of foreign funds

  • Cancellation of FCRA license

🔹 Advisory: Even domestic NGOs planning foreign donations in the future should comply proactively.

3. Governance Best Practices

• Hold quarterly board meetings and document minutes

• Establish internal audit committee for financial oversight

• Maintain Conflict of Interest Policy for trustees or directors

• Draft a Fund Utilization Policy to ensure donations are used properly

• Maintain a code of conduct for staff, volunteers, and trustees

4. Financial & Tax Compliance Nuances

• Segregate funds: corpus fund, restricted funds (for specific programs), general donations

• 80G donations: Only eligible donations are tax-deductible; maintain proper receipts

• 12A/12AA: Registration must reflect the NGO’s objectives accurately

• For Section 8 Companies, maintain mandatory statutory registers:

  • Register of members

  • Register of directors

  • Register of charges

🔹 Advisory: Errors in 12A/80G/FCRA filings are the most common cause of penalties.

5. Digital & Operational Compliance

• Maintain digital accounting for transparency

• Use cloud storage for all statutory documents

• Implement project-wise reporting for grant-funded programs

• Maintain audit-ready reports for donors and government authorities

6. Common Pitfalls & Advisory Notes

7. Strategic Considerations for NGO Growth

• Section 8 Companies are better for large-scale operations and international funding

• Private trusts are ideal for family-managed philanthropy or small initiatives

• Societies are suitable for member-driven initiatives (e.g., education or healthcare)

• Plan combined 12A/80G/FCRA registration during setup to avoid multiple processes

• Ensure objectives in governing documents are clear and legally compliant for grants

8. Sample Trustee / Board Advisory Draft

Objective: Guide NGO governance and operational compliance

Draft Guidelines:

1. Trustees/Directors must act bona fide in the interest of beneficiaries

2. Maintain transparency and accountability in all financial matters

3. Approve annual budgets and audited accounts

4. Ensure legal compliance with IT Act, FCRA, Companies Act, Societies Act

5. Conduct quarterly board/trustee meetings and document minutes

6. Avoid personal gain or conflict of interest

7. Ensure proper utilization of donations for objectives

8. Submit annual reports to authorities on time

9. Compliance Checklist – Advanced

• Governing documents (Trust Deed / MOA & Rules / Section 8 MOA)

• Registration certificate with Sub-Registrar / Registrar / ROC

• PAN & dedicated bank accounts

• 12A / 12AA registration for tax exemption

• 80G certificate for donor tax benefit

• FCRA registration if receiving foreign funds

• Annual accounts & audit (CA-certified)

• ITR-7 filing

• Quarterly/Annual trustee meetings & minutes

• Renewal of 12A / 80G / FCRA approvals

• Compliance calendar with deadlines for filing & reporting

• Internal fund utilization and conflict of interest policy

10. Advantages of Full Compliance

• Legally recognized NGO with tax benefits

• Donors can claim 80G deduction

• Eligible for foreign and government grants

• Avoid penalties, fines, and legal action

• Ensures credibility and transparency for stakeholders

This additional information ensures your NGO Compliance guide is truly complete, covering:

• Legal frameworks

• Tax & FCRA nuances

• Trustee advisory

• Advanced operational & governance practices

• Strategic planning and practical tips