NGO is now a widely used word denoting to registered trusts, societies, cooperative societies, endowments, non-profit companies, etc. working for the welfare, development and progress of people and in a way supplement similar functions of the state and hence, called as Non-Government Organizations (NGOs).
NGO may be defined as association having a definite cultural, educational, economical, religious or social association organization. They are not owned by any one and cannot distribute profits as such. Whatever profits they may earn from economic activities are reinvested or spent on appropriate nonprofit activities. The typical sources of revenue or non-governmental organizations are donations, membership fees, interest and dividends on investments.
NGOs are defined by the World Bank as "private organizations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development"
NGO organizations operate with their own fund and with the funds raised through its volunteers or through donation for a social cause.
Sometimes the Government use to fund the NGO organization totally or partially in project based or in object and social activity based. To monitor, to assist NGO our Indian Government allocated the Social welfare Ministry which supports to do several welfare activities as per the need and desire of NGO organization.
As the NGO organizations are operating as a legal entity, Indian government encourages such nonprofit organization to make them eligible with specific certifications, tax exemptions, additional power of importing funds through special permission from Indian Government and special project implementations through Social welfare ministry of India.
Benefits of Registration
Why should one go for registering an NGO?
Various Voluntary organization & Institutions are working together for the welfare & development of the Society. Any person or the entity has a right to carry on development work irrespective of having any formal registration. However, if we view it from legal angel any organization which is not registered has no legal entity. It has no importance in the eyes of Law. Thus it is important that all voluntary organization should get themselves registered under any preferred law, particularly when it is going to deal with the government frequently or interested to avail officially permitted public funds or foreign donations and grants activities.
NGO does not have to register itself to perform charitable, welfare or developmental activities. However, there are some specific types of activities that can only be carried out if the NGO is registered under the country's specific acts or laws governing NGOs (particularly related to fund-raising). In fact, a group can call itself an "NGO" only after it has registered itself.
There are also certain important advantages an NGO may gain upon registration, which it could otherwise not take advantage of. Ideally, due to obligations required of a registered NGO, the registration process leads to the development of systematic thinking and functioning of NGOs.
What are benefits of registering an NGO?
· Registered NGOs obtain legal status in order to enable them to interact at the official level, and among donors and other organizations. Members are able to represent the organization,
· NGO can open a bank account in the name of the organization, or sign contracts in the name of the organization
· A registered NGO can also qualify for financial assistance from government agencies and local, national and international donors
· Recognition to the society at all forums and before all authorities
· Obtaining registration and approvals under Income Tax Act for availing Exemption of Income Tax
· Other benefits that are believed to flow from registration are guidance and help from relevant registration authorities, contract funds and support from the relevant departments, tax exemption from certain incomes, training opportunities, technical assistance, and concessions when obtaining vehicles, equipment and commodities. However, these benefits are not uniformly spread across all types of registration, nor are all NGOs are able to claim them.
If you plan to ...
· raise funds (domestic or international) for project implementation
· hire people to carry out the implementation, and pay them a salary
· represent the organization in meetings (especially government or UN organized ones)
· sell products and/or publications (albeit not for profit)
· take advantage of tax-free breaks that may be in place for NGOs
So, It’s better to register as NGO
Role of NGO
NGO plays a vital role in the social welfare & development of poor, Women & disadvantage group by providing basic needs & facilities to the above group. In India, NGOs (non-governmental organizations) are increasingly playing a balancing role between the state and citizens to ensure the latter's easy access to fundamental rights and state/central government's developmental schemes. Being an interface between the common people and government administration, an NGO's role in streamlining the services for the masses is vital for the healthy functioning of any democracy.
Government has formed various schemes & plans. NGO can participate with the government for execution of these schemes & plans.
Age Care Agricultural
Animal Welfare
Art & Craft
Child Welfare
Cities & Urban
Culture & Heritage
Disability
Education
Environment
Health
Human Resource
Rural Development
Science & Technology
Tribal People
Waste Management
Welfare
Women Development
Other Social & Cultural Activities
Formation of NGO
A Non-Governmental Organization (NGO) can run as a registered or non-registered group of people. However, it is better to get it registered under any preferred law, particularly when it is going to deal with the government frequently or interested to avail officially permitted public funds or foreign donations and grants
Non-profit organizations can be registered as: -
(1) Trusts: The public charitable trust is a possible form of not-for-profit entity in India. Typically, public charitable trusts can be established for a number of purposes, including the relief of poverty, education, medical relief, provision of facilities for recreation, and any other object of general public utility.
(2) Societies: Societies are membership organizations that may be registered for charitable purposes. Societies are usually managed by a governing council or a managing committee. Societies are governed by the Societies Registration Act 1860, which has been adapted by various states. Unlike trusts, societies may be dissolved.
(3) Private limited company under Section-8 Company.: A section 8 company is a company with limited liability that may be formed for "promoting commerce, art, science, religion, charity or any other useful object," provided that no profits, if any or other income derived through promoting the company's objects may be distributed in any form to its members.
FAQ
(1) What is NGO?
Ans. - NGO is a Non-Government Organization
(2) Which documents are required for NGO Registration?
Ans. - NGO name, Ngo address, minimum 7 body members (name, address, age, qualification, occupation)
(3) Where we have to submit the documents for NGO Registration?
Ans. - You have to submit all the documents in Charity Commission Office.
(4) Any Extra Amount we have to pay after giving you Rs. 2000/-?
Ans. - No, you don't have to pay any other charges.
(5) Is there any address proof required for NGO Registration?
Ans. - No. Only basic detail is required. NGO name, Ngo address, minimum 7 body members (name, address, age, qualification, occupation)
(6) Which one is good to Registered Society or Trust?
Ans. – Society
(7) Is this right we required only 2 body members for Trust Registration?
Ans. – Yes
(8) Any Extra charges we have to pay at the time of submission of Documents at Charity Commission Office?
Ans. - yes, you have to pay only Rs 120/-
(9) Where is the Charity Commission Office?
Ans. - That is based on District Level, you can find your Charity Commission Office in your city.
(10) How much time it will take for NGO Registration?
Ans. - It will take one to two months.
(11) What are the things to be kept in mind while proposing a name of the society?
Ans. - things to be kept in mind while proposing a name for the society are: The name of the society proposed should not attract the provisions of The Names and Emblems ( Prevention of Improper Use) Act 1950 i.e the name proposed should not imply any connection with Government of India, or Government of State or any connection with legal authority The name proposed for the registration of the society should not be identical to name of any other society, which has already been registered or resembles such name likely to deceive the public or the members of the society.
There is prohibition of use of any name, emblems, official seals specified under the Names and Emblems Act without permission of the appropriate authority.
There is prohibition of the use of the name of the national heroes or other names mentioned in the Names and Emblem Act, 1950.
The registrar of Societies can be approached with alternative names to ascertain whether the same are not undesirable and are not being used by any other existing societies
The name of the Society should not suggest obscenity or be against decency and decorum. It should not be undesirable in the opinion of the Registrar
(12) Who all can form a society?
Ans. - A society can be formed by "Any Seven or more persons associated for any literary, scientific or charitable purpose, or for any such purpose as described in Section 20 of this Act, may, by subscribing their names to a memorandum of association, and filing the same with registrar of Joint Stock Companies (The word Joint Stock Companies has been replaced by respective state acts as either Registrar of Societies or Inspector General of registration or as the respective State Act may specify) form themselves into a society under this Act".
(13) What is the eligibility to form a society?
Ans. - Apart from individuals the following persons are also eligible for subscribing to the memorandum of the society:
Foreigners: Foreigners can subscribe to the memorandum of the society.
Partnership firm: The position of Partnership firm regarding its eligibility to subscribe to the memorandum of the society is not clear from provisions of the Partnership Act 1932, Societies Registration Act 1860 or any other judicial decision. However simple analogy can be drawn by keeping in view the provisions of Sec 25(4) of Companies Act, 1956 which permits a partnership firm to become a member of a Section 25 company and provides that the firm may be a member of any association or company registered under the provisions of the Companies Act 1956. However, on dissolution of the firm, the membership of the firm to such an association or company will lapse. Therefore, drawing a parallel from the above, we may deduce that a partnership firm may subscribe to the memorandum of society.
Limited company: Company can subscribe to the memorandum of society
Registered society: A registered society can subscribe to memorandum of association of proposed society.
(14) What is the purpose for which a society can be formed?
Ans. - According to Section 20 of the Societies Registration Act 1860 the society may be registered for the following purpose:
Grant of charitable assistance
Creation of military orphan funds
Societies established at the general presidencies of India
Promotion of science, literature, fine arts, instructions or diffusion of useful knowledge, diffusion of political education, foundation or maintenance of libraries, public museum and galleries of paintings, works of art, collection of natural history, mechanical and philosophical inventions, instruments, designs.
(15) What are the steps for alteration, extension or abridgement of the aims and objectives of a society?
Ans. - Section 12 of the Societies Registration Act 1860 has laid down the following steps for alteration, extension or abridgement of the aims and objectives of a society which have to be followed:
Submission of the proposal by the governing body to the members of the society
10 days’ notice to members about holding of a special meeting,
Convening a special meeting for the consideration of the proposal,
Approval of the proposal by 3/5th of members,
Convening second special meeting after a month, and
Confirmation by 3/5th of members present at the second special meeting
(16) What is the procedure for change of the name of the society?
Ans. - In general, various state acts under section 12,12A,12B give the following procedure for change of the name of the society:
Convene a general meeting for the purpose of the change of the name
A resolution should be passed by a majority
The notice in writing of the change of name, which has to be signed by the Secretary of the society along with seven members (as in case of the registration of the memorandum of association), should be submitted to the registrar.
(17) What are the books of accounts to be maintained by a society?
Ans. - Generally the following books of account to be maintained by the society on Single Entry/Double Entry basis are:
Cash Book/Bank Book giving the daily receipts
Voucher files
Ledgers
Receipt books
(18) Should a society get the books of accounts audited by a society?
Ans. - There are various provisions under the specific State Societies Registration Act(s) wherein provisions for Audit and filing of annual returns are specified. In general, these Acts specify the check and audit of the accounts to be done by a duly qualified Chartered accountant within the meaning of the Chartered Accountants Act 1949 or a person approved by the Registrar of Societies in this behalf.
(19) In which form should a society maintain its books of accounts?
Ans. - Section 145 of the Income Tax Act provides that either cash or mercantile system of Accounting should be followed. However, it has been held in various court cases that Section 14 i.e income of charitable organizations need not be computed under various heads of income, therefore there is no clarity whether a charitable organization also come under the purview of Section 145 or not. Therefore, in absence of any clarifications, a charitable organization can maintain books of accounts from the following three methods of accounting:
Cash Basis of Accounting
Accrual Basis of accounting
Hybrid/Mixed basis of Accounting
(20) What are the specific rules for Accounting and Audit of Foreign Contribution received by a registered society under the FC(R) A?
Ans. - For organizations which are receiving the grants or funds from international agencies, it is also important to follow the rules and the guidelines of the Foreign Contribution Regulation Act. Under the FC(R) A, Section 13 states that:
an account of any foreign contribution received by it, and
a record as to the manner in which such contribution has been utilized by it. Rule 8 of the Foreign Contribution Regulation (FCR) Rules 1976 states that : A separate set of accounts and records shall be maintained, exclusively for foreign contribution received and utilized-
In Form FC-6, where the foreign contribution relates only to articles as referred to in item (1) of sub-clause (c) of clause (1) of section 2; (b) In the cash book and ledger account on double entry basis, where the foreign contribution relates to currency received and utilized, and a separate bank account shall be maintained in respect of such contribution;
In Form FC-7, where the foreign contribution relates to foreign securities. Every account specified in sub-rule (1) shall be maintained on yearly basis, commencing on the 1st day of April each year and every such yearly account, duly certified by a chartered accountant in Form FC-3 along with a balance sheet and statement of receipt and payment shall be furnished in duplicate, to the Secretary to the Government of India, in the Ministry of Home Affairs, New Delhi, within four months of the closure of the year.
(21) What do you mean by 'Forthwith' Under Section 13 for dissolution of a society under the Societies Registration Act 1860?
Ans. - 'Forthwith' according to the dictionary means, 'immediately, at once, without delay or interval'. In Bidya Deb Burma Vs District Magistrate Tripura, Agartala AIR 1969, the court interpreted from the case of Keshav Nilakanth Joglekar Vs Commissioner of Police Greater Bombay, (the Constitution Bench of Supreme Court) that "When a Statute requires that something shall be done 'forthwith' or 'immediately' or even 'instantly', it should probably be understood as allowing a reasonable time for doing it". Therefore 'Forthwith' does not mean a precise time but should be within a reasonable time without avoidable and unreasonable delay.
(22) What do you mean by 'Principal Court of Original Civil Jurisdiction' Under Section 13 for dissolution of a society under the Societies Registration Act 1860?
Ans. - Principal Court of Original Civil Jurisdiction under Section 13 of the Act means the Principal Court of Civil Jurisdiction of the District where the Registered Office of the society is situated. In case of any dispute relating to adjustment of affairs of a society in case of dissolution, the matter has to be referred to the Principal Court of Civil Jurisdiction of the District where the Registered Office of the society is situated.
(23) How can a society be dissolved?
Ans. - A Society can be dissolved by:
Its members,
The Registrar,
The Court or
By the Government.
(24) Under what circumstances can a registrar dissolve a society?
Ans. - The registrar of societies (as per the respective state acts) can dissolve a society. These circumstances may be:
According to the memorandum of association governing the society:
Society's object clause has not been fulfilled
Office of the society has ceased to be in state of registration
Members of the society are below the required number of seven
Society has ceased to function for a particular period of time.
Society has been declared insolvent (not able to pay its liabilities)
Society's activities are against the Governmental or the state policy
Society has become insolvent
Society has contravened any law or the provisions of the Societies Registration Act 1860
(25) When can a court dissolve a society?
Ans. - Section 25 of West Bengal Act gives the provisions for dissolution by Court where the court may on an application of the registrar or on the application of not less than one tenth of the members, make an order for the dissolution of a society in the following cases:
If there is a contravention of the provisions of the Societies Act by the society.
If the number of members are below seven.
If the society has ceased to function for more than three years.
Society is unable to pay its debts or meet its liabilities.
If it is proper that the society should be dissolved.
Comparison among Trust, Society and Nonprofit Company
Trust:-
Relevant State Trust Act 1882 or Bombay Public Trusts Act, 1950 (Statute/Legislation)
Deputy Registrar/Charity commissioner (Jurisdiction)
As trust (Registration)
Trust deed (Registration Document)
Trust deed to be executed on non-judicial stamp paper, vary from state to state (Stamp Duty)
Minimum – two trustees. No upper limit. (Members Required)
Trustees / Board of Trustees (Board of Management)
Appointment or Election (Mode of Succession on Board of Management)
Society:-
Societies Registration Act, 1860 (Statute/Legislation)
Registrar of societies (charity commissioner in state). (Jurisdiction)
As Society In Maharashtra, both as a society and as a trust (Registration)
Memorandum of association and rules and regulations (Registration Document)
No stamp paper required for memorandum of association and rules and regulations. (Stamp Duty)
Minimum – seven managing committee members. No upper limit. (Members Required)
Governing body or council/managing or executive committee (Board of Management)
Appointment or Election by members of the general body (Mode of Succession on Board of Management)
Section-8 Company:-
Indian Companies Act, 2013 (Statute/Legislation)
Registrar of companies (charity commissioner in state). (Jurisdiction)
As a company u/s 8 of the Indian Companies Act. (Registration)
Memorandum and articles of association. and regulations (Registration Document)
No stamp paper required for memorandum and articles of association (Stamp Duty)
Minimum three trustees. No upper limit. (Members Required)
Board of directors/ Managing committee (Board of Management)
Election by members of the general body (Mode of Succession on Board of Management)
From Registration to projects, documentation, audit, legal guidance, etc. we provide all services to NGO according to their needs.
Contact us – 00 91 79 070 48 573/ areklm0076@gmail.com/ www.areklm.com - ARE is Recognized with the goal of Providing an excessive Range of Services to NGO - Society - Trust - Private Limited Company - Partnership Firm - Proprietorship Firm - LLP - Limited Liability Partnership.