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Non-Governmental Organization (NGO) is an entity that works for charitable purposes. NGO is known as a not-for-profit making organization that works towards the promotion of arts, science, sports, education, research, social welfare, religion, charity, and more. NGOs in India are of various types which are registered under Trust Act, Society Registrations Act, or the Companies Act.
NGO is registered in the form of Section 8 Company under the Companies Act, 2013. Companies registered under this act are all not-for-profit and charitable trusts. The only difference between a trust or society and NGO is that the latter is registered under the Ministry of Corporate Affairs (MCA).
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Things To Do – Before Applying for NGO Registration
Obtain Digital Signature Certificate (DSC)
Proposed directors are supposed to provide Digital Signatures, as the registration forms are to be digitally signed before filing the form online. Certifying agencies under the Government of India issue Digital Signature Certificate (DSC). Applicants need to obtain either Class 2 or Class 3 category of DSC. The fees for obtaining DSC vary and depend on the certifying agency.
Apply for Director Identification Number (DIN)
Applicants are required to apply for a DIN for the proposed directors of the company. Filling of application Form DIR-3 helps in the allotment of DIN. Scanned documents like self-attested copies of PAN, identity, and address proof of directors are to be submitted along with the application form. The application form can be submitted online on the Ministry of Corporate Affairs (MCA) portal. The documents are required to be attested by a practicing chartered accountant, company secretary, or cost accountant.
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Steps to Register as an NGO
Step 1: The applicant needs to obtain a DSC of the proposed Directors of an NGO. After a DSC is obtained, file Form DIR-3 with the ROC to get a DIN.
Documents to attach for DIN application:
- Identity and Address Proofs: Passport, Voter’s ID card, Aadhar card, electricity bill, driving license, PAN card, house tax receipt, business address proof, society’s name, etc.
Step 2: After the approval of DIR-3, the respective ROC will allot a DIN to the proposed directors.
Step 3: Next the applicant needs to file Form INC-1 with the ROC to apply for a company name. Preference of 6 names can be applied from which one would be allotted by ROC, depending on the availability.
Step 4 – After the approval from ROC, file Form INC-12 to apply for a license for an NGO
Documents to attach with INC-12:
- Declaration, as per Form INC-14 (Declaration from CA)
- Declaration, as per Form INC-15
- Draft Article of Association (AOA) and Memorandum of Association (MOA) as per Form INC-13
- Estimated Income & Expenditure for next 3 years
Step 5 – After the Form’s approval, the NGO license will be issued in Form INC-16.
Step 6 – After the applicant has obtained the NGO license, he/she needs to file SPICE Form 32 with ROC for incorporation. After the ROC has checked and verified the documents, it issues a Certificate of Incorporation with a unique Corporate Identification Number (CIN).
By following these simple steps, an applicant can register his/her company as NGO.
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Eligibility to Start an NGO
- Minimum 2 directors required if NGO is to be incorporated as a private limited company
- Minimum of 3 directors required, in case of incorporation as a public limited company
- The maximum number of members is 200, in the case of a private limited company
- No member limit in case of a public limited company
- No fee is charged if registering as an NGO
Forms Required for NGO Registration
DIR 12 Appointments of Directors
DIR 2 Consent of Directors
DIR 3 Application to ROC to get DIN
INC 1 Business name approval
INC 12 Applications for License
INC 13 Memorandum of Association
INC 14 Declaration from a practicing CA
INC 15 Declaration from each person making the application
INC 16 License to incorporate as NGO
INC 22 Situation of Registered Office
INC 7 Applications for Company’s Incorporation
INC 8 Declarations
INC 9 Affidavit from each director and subscriber
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Benefits of NGO Registration
Registering your company under NGO of Companies Act, 2013 has several benefits which are as discussed below:
Tax saving
Registering your company as an NGO under the Companies Act, 2013 and avail several taxation benefits for the directors of the company. NGOs are exempt from several taxes, and it helps the company save taxes and invest the saved money in further projects.
Lower Share Capital
All the companies need a minimum share capital to function independently. This isn’t the case with NGOs since they can be directly funded with the donations made to them. The subscriptions can also help to support the proceedings undertaken by the company. This means that NGOs do not need a higher share of capital to function independently.
Title Usage
Most companies are obligated to make their limited liability status public. This is not the case with companies registered under the Companies Act. These registered companies are exempted from the use of any titles. They can function without making their limited liability status public which is a significant benefit for the company in terms of the capital they need to make public.
Transfer of ownership/titles
Companies registered as NGOs under the Income Tax Return Act of 1961 are not restricted to transfer their ownership or claims of the interests earned. However, other companies cannot move their ownerships with such ease, which benefits NGO registered companies.
Stamp Duty Exemption
All companies registered as NGOs under Income Tax Act 2013 are exempted from stamp duty, which accounts for more tax-saving methods for the company. All the taxes saved through stamp duty are then invested in the promotion of the motto taken up by the company. Exemption of stamp duty protects funds for the company, which makes the functioning of the company smoother increasing the productivity of the company.