How to Start Your NGO: Legal Aspects
Non-Government Organizations, or NGOs, are a respite for the underprivileged across the world. Ideally, it’s the government who is responsible for all things legal and constitutional. However, when the government stumbles, it’s these NGOs who act as a lifeboat to those in need.
Establishing an NGO can be a lengthy and time-consuming process, even more so than a normal business venture.
If you’re a person with philanthropic impulse, looking to start an NGO or already running one, this blog will help you to get familiarised with the legal compliances applicable to an NGO.
Who can start an NGO?
You’re eligible to start and run your own NGO if you’re of sound mind and are minimum 18 years of age. There are no specific educational qualifications required. WizCounsel helps you hire a CA to register your own NGO without burning a hole in your pocket.
Here are some of the basic legal requirements for starting your own not for profit organization.
- Name: Your NGO’s name is going to be used everywhere. So, before deciding on a name, check the availability. Obviously, the name should be unique and not similar to any existing NGO. Also, it must not suggest an alliance with the Indian Government.
- Members: The number of members required to start an NGO depends on the type of NGO registration. For instance, if you’re establishing a Not for Profit Society, you need a minimum of 7 members whereas you require only 2 members to start a Trust.
- Paperwork: Memorandum of the constitution, article of association, trust deed, rules, regulations, acts, laws, clauses, aims, objectives, and, mission and vision statements – you require all these documents to prove that your NGO exists. All these documents act as legal proof of existence.
You also require identification proof and address proof. Once you have everything in place, the next step would be to register your NGO officially.
Officially Register Your NGO
As mentioned above, you can register your NGO under one of these laws based on your NGO type:
- Companies Act, 2013;
- Society Registration Act, 1860;
- Public Charitable Trust Act, 1882.
Benefits of Registering Your NGO:
Yes, registering an NGO is a fair amount of work. However, there are many benefits associated with registering your NGO. Once registered, an NGO can:
- Exist independently of the state;
- Obtain legal status to interact at the official level;
- Qualify for financial assistance from local, national and international donors and also from government agencies.
Moreover, members can represent the organization, open bank accounts or sign contracts in the NGO’s name. Contract funds, training opportunities, technical assistance and tax exemption from certain incomes are some of the other benefits that registered NGOs can avail although the available benefits depending upon the kind of NGO registration. Let WizCounsel help you find an NGO expert near you for better assistance.
Compliances for NGOs:
Contrary to popular belief, NGOs are not immune to taxation. Here’s everything that you need to take care of on the taxation front.
- PAN: Once your NGO is registered with the relevant authorities, it is mandatory to apply for the Permanent Account Number (PAN).
- 12A of the Income Tax Act: If you want some tax benefits, you should register u/s 12A of the Income Tax Act. Though it’s not mandatory, the main advantage is getting a tax exemption on the income your NGO earns. You can avail this exemption if you fulfill all rules and regulations mentioned under this section.
- 80G of Income Tax Act: Under the Income Tax act, donors can claim 50% to 100% exemption on donations and contributions they make to your NGO. However, to claim these, it is necessary to register the NGO u/s 80G of Income Tax Act. It will indirectly help you to raise funds.
- GST Registration: Depending on your aggregate turnover and the kind of services you provide, you would also have to register under GST. However an NGO can be exempted from charging GST if it is registered under Section 12AA of Income Tax Act, and the NGO or charitable trust is providing services for a charitable cause. In case you want to understand how GST works in India read our blog on “Understanding GST was never this simple“.
Remember – setting up and running an NGO that successfully helps people requires more than a desire to help people. Hard work, determination, and moral support are the pillars of any charitable organization.
You obviously want a sustainable organization that can continue helping people even in your absence. So, don’t neglect the legal aspects of forming an NGO.
Hire NGO Registration Experts on WizCounsel to register your NGO according to your budget. Track the registration process, get dedicated support and 100% money back guarantee.
WizCounsel is India’s trusted Marketplace to find Lawyers, CAs, Accountants & Bookkeepers online for Legal Services, Tax Services, Business Registration Accounting & Bookkeeping services. If you or your associates are looking for experts who can help you out with registering an NGO then WizCounsel can help you achieve the same at very affordable rates.