Lately, I have done research about how to register non-profit organizations in India. I thought of summarily present my findings in this article so that others on the same quest can be benefited.
In India, Non Profit Organizations (NPOs) are often called the Non Government Organizations (NGOs). An NGO could be registered as one of the following three ways:
- As a Trust (See how to register a trust)
- As a Society
- As Section 25 Company
SEE ALSO: Difference between trust and society
In India, societies are governed by a central act called Societies Registration Act, 1860. All the states in India have adopted this act (with or without modifications) to create authorities at state level that register non-profit organizations.
- The main documents in the registration of a society are Memorandum of Association (MOA) and Rules and Regulations (RR). These two documents are written/printed/typed on plain papers.
- Minimum seven people are required to form a society. There is no upper limit on the number of members.
- These members have various designations that can be decided among themselves. Common designations are President, Vice-Present, Secretary, Joint-Secretary and Treasurer etc.
- These members are collectively called the Governing Body. This body directs and controls the functioning of the society.
- All the members of society are elected for a specific period (which should be mentioned in the MOA). After expiry of this period; the post is filled through elections in which members of the Governing Body take part.
- Because of the involvement of election process –societies are more democratic than trusts. But at the same time –power struggle and politics may also creep in as drawbacks. In case of societies, through election politics, it is possible to remove the person who had initiated the society in the first place.
- Unlike trusts, societies function only within a specified geographical area. To make an all India level society, you would need at least eight members (of which five should be from different states of India)
- The Memorandum of Association must mention:
- Name of the Society
- Address of the registered office
- Names, designations, addresses and occupations of the members of first governing body
- Objectives of the society
- No stamp paper is required for MOA and RR
- Most important part of the MOA that you should pay attention to is objectives. You should be as thorough as possible in writing down objectives so that you can function smoothly without any problems.
- Related people (i.e. belonging to the same family) cannot be part of the governing body.
- Members of the Governing Body can not draw any remuneration from the society funds.
- While executing their duties as members, expenses incurred by the members of the Governing Body can be reimbursed from the society funds.
- Society income is exempted from tax. For this, after registration, you need to acquire a certificate from the Income Tax Department. This certificate is called 12A
- Donations to the society are also exempted from tax (i.e. the donor will not have to pay tax on the amount of donation). For this, you need to acquire 80G certificate from Income Tax Department. Getting 80G and advertising that you have this certificate does encourage donors because they get tax benefit on donation.
- Usually lawyers and practicing CAs can help you in registration of society –but I guess a lawyer is better person if you need help in formulating your MOA and RR. CAs don’t know the nitty-gritty of the legal stuff.
- If you can write MOA and RR on your own –and sure that you have done a good job –then all you need is help of a notary who will take your papers and prepare them for the presentation before the registrar.
- After registration, for acquiring 12A and 80G certificates you may need to take services of a practicing CA. They charge hefty fee for these services.
SEE ALSO: How to apply for 80G Exemption
If you need more information regarding this matter, you may comment on this article. I will see if I can help you with information.