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NGO Registration types and their benefits

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| Updated: Jan 05, 2019 | Category: NGO Registration

If you’re going to start an NGO, then you must first obtain NGO registration. Furthermore, you should be aware of the various NGO registration types and their benefits so that you can be more specific about your needs and resource availability for starting an NGO.

Hence, in this blog, we have discussed the various types of NGO and advantages each of them offer. Let us start with a short introduction of NGO.

NGO Registration in India

Non-governmental organizations often referred to as NGOs, are typically non-profit organizations that are independent of government. However, they are often funded by governments and international government organizations.

The principal objective should be to support the underprivileged. Apart from this, NGO aims at creating awareness of different things that are less talked about in society and are often ignored.

NGOs are active in educational, public policy, social, humanitarian, health care, human rights, environmental, and other areas to effect changes based on their objectives.

Browse through our articles on servies provided at Swarit Advisors, and just let us know if we can help you with your NGO and Section 8 Company registration or tax filing or trademark registration.

What’s the purpose of NGO Registration?

It truly doesn’t matter what kind of NGO you are running or going to commence. The sector you work might differ, but you must have the ultimate goal and inherent desire of helping and supporting others, be it in education, art, skill development, etc.

Once you’re determined to start an NGO, you should have a clearly defined goal and a transparent vision for which it is established and will be operated. Plus, you must also mention the beneficiary which can be either public in general or a set of people.

NGO Registration in India

Different laws applicable for NGO registration in India

NGO registration in India can be done under three regulating acts as follows:

  • Indian Trusts Act, 1882 for trust registration;
  • Societies Registration Act, 1860 for society registration; and
  • Companies Act, 2013 for Section 8 Company Registration.

Types of NGO registration

As we discussed above, there are three laws that regulate the NGO registration process. Therefore, there are basically three types of NGO registration:

  1. Trust Registration
  2. Society Registration
  3. Section 8 Company Registration

Trust Registration

NGO registration obtained under the Trusts Act 1882 is known as trust registration. Mainly, the public charitable trusts or private trusts are designed to aid members of an uncertain and varying class. While determining the trust as private or public, the key question arises whether the class to be benefited constitutes a substantial segment of the public.

The trusts may register for the following purposes:

  • Education;
  • Relief of poverty or distress;
  • Medical relief, etc.

Checklist for Trust registration

  • A minimum of two trustees is required to register a public charitable trust.
  • Every state has a different Trusts Acts in force, which governs the trusts in the state.
  • The prime tool of any charitable trust is the trust deed, wherein the aims, objects, and the mode of management of the trust should be enshrined.
NGO Registration in India

Advantages of Trust Registration

Various benefits offered under Public Charitable Trust Registration are:

  • In most of the states, there’s no law that governs Public Charitable Trusts in India. However, many states do have Public Trusts Act such as Madhya Pradesh, Maharashtra, Gujarat, and Rajasthan.
  • An NGO registered under the Trusts Act can use the word “Govt. Regd.” or ‘Regd’.
  • Land from the government.
  • Several tax benefits such as Income Tax, etc.
  • 80G certificate benefit under the Income Tax Act.
  • White capital for Building construction.
  • Benefits in Entertainment Tax and Service Tax.

Society Registration

A society is a group of individuals that come together for any scientific, literary or charitable purposes or for purposes as mentioned in section 20 of the Society Registration Act, 1860. An NGO registered under the Society Act, 1860 is known as Society Registration.

Checklist for Society registration

  • For registering society in India, there’s a requirement of at least seven or more members.
  • In the case, companies or societies registered outside India are interested in commencing a society in India then they would have to subscribe to the Memorandum of society in India.
  • In India, society registration is not obligatory.
  • However, NGO registered as society gets legal protection and become eligible for the several advantages offered by the government.

Benefits under Society Registration

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

  • Separate legal identity

One of the major advantages that come with society registration is that the NGO is a separate legal entity in the eyes of law. Due to this distinction, the members of such NGOs are responsible only for the action undertaken by them and not by other members.

  • Limited Liability

Society NGO is a separate legal entity from its members. Thus the liability of the members of is limited to their share only. That means in no circumstances the personal assets of the members cannot be utilized for the payment of the liabilities of the firm.

  • Exemption from income tax

Income Tax exemption is what everybody desperately seeks for. And, society registration is a kind of NGO registration where the firm is saved from paying income taxes.

  • Legal protection

Once you have registered your society under the Society Registration Act, 1860, you will be provided with the legal protection. It implies that no other company or people can use your personal assets, your company name, etc. Anybody found liable for any infringement would be subject to punishment.

For information on documents required for NGO registration, read more.

Section 8 company registration

Section 8 company registration is a form of NGO registration obtained under Section 8 of Indian Companies Act, 2013, and established for encouraging and promoting art, science, commerce, charity, religion or any other beneficial object. Furthermore, the profits, if any, or other income is applied for encouraging the objects of the companies and no dividend is paid to its members.

One can register his or her company under section 8 as a private limited, public limited, one person company or limited liability partnership.

Section 8 companies are, in fact, incorporated to perform the principal objective of welfare of the society in any of the field described above.

Checklist for Section 8 Company Registration

  • The most important tool for a section 8 company is a Memorandum of Association (MoA) and Articles of Association (AoA).
  • The company must be registered either as a private limited or public limited or limited liability partnership.
  • There should a minimum of two directors and two members for the company incorporation.
NGO Registration in India

Benefits of Section 8 company registration

NGOs registering themselves under Section 8 company registration can avail various advantages from it as follows:

  • No minimum capital requirement

Unlike other entities such as public limited company, section 8 companies have no prescribed limit for any minimum capital requirement. However, the capital structure of the firm can be altered at any stage which may be required for the growth of the company.

  • Separate legal entity

Like Private Limited and other limited companies, a Section 8 company, too, holds its own identity and possesses its own separate legal entity from its members. Moreover, a Section 8 Company has a perpetual existence.

  • Tax exemption

Well, it’s one of the greatest advantages that NGOs registering under Section 8 Companies are provided with, especially those contributing to section 8 companies. There are several tax exemptions under this kind of NGO registration. Even the contributors can claim the tax exemption against the donation made to this form of NGO.

  • No stamp duty payable

Such NGOs are also exempted from the payment of stamp duty applicable for registration as applicable for registration similar to the one applicable in case of private limited or public limited company.

  • No title required

Unlike in the case of the private limited and public limited company, where names and title are must, a section 8 company doesn’t require to use a suffix next to its name.

  • Better credibility as compared to others

Yes, you heard it correct. The section 8 company is more credible than any other NGO structure, be it Trust NGO or Society NGO. Since the central government is liable for the issuance of a license, the company has more stringent regulations like no change in MOA and AOA is possible at any stage or situation in a Section 8 Company. Because of the strict compliances under section 8 company, its functioning is found to be more reliable when compared to other legal structures.

  • Ease of ownership or title transfer

As per section 8 of the Income Tax Act, 1961, people can easily transfer the title or ownership of both movable and immovable interest without any hindrance or restrictions of any kind.

Apart from the above-described benefits, there are many other advantages of section 8 company registration such as exemptions from income tax act, conducting general meetings under a short notice period which is within 14 days instead of 21 days, etc.

Learn about NGO registration procedures.

Conclusion

From the above discussion, it’s concluded that NGO registration, irrespective of its various forms, is done to aid the underprivileged, or encourage and promote science, commerce, arts, literature and more. The profits earned are supposed to be utilized for the growth and well-being of certain societies and welfare.

Now, if you’re looking to start an NGO, then you need to first encounter what kind of NGO you want to run. Once you have decided, find out whether it matched with your requirements or not. If yes, then you can continue with your plan and get the NGO registration done through a consultant.

Swaritadvisors is one of the leading consultants in India which is known for its fastest delivery of NGO license. If you have any queries regarding NGO registration, then you can contact our experts.

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Khushboo Priya is an experienced Legal content writer with a prodigious proof-reading and research & development skill.

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