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NGO stands for Non Governmental Organization which can be formed by a group of private persons. NGO is registered under the Society Registration Act of 1860 and recognized by government for performing some of the functions or allocated work on behalf of government. This is a very unique and informal type of arrangement made by the government wherein the government extents the help, support and authority to a private entity to perform some work of government on its behalf. The activities being assigned to NGOs are mainly welfare activities which may be of various types. In some cases the activities assigned to the NGO are also administrative also. NGO term is widely used for the registered trusts as well as societies in India which perform such work. Government is more concerned about the compliance of the various norms related to the grants to be given to the society and the utilization of the funds by the NGO.
Establishing NGO in India
A NGO can be established either through a registered Society or through a Trust. Both these options are explained in details here under:
Society under The Society Registration Act, 1860
Establishment of a NGO in India is through the registration of a Society under the Society Registration Act of 1860 for which at least seven persons are required as the desirous persons to establish the said society. The identification and residential proof of the said persons is essential. An application for registration of the society is submitted before the registrar of Society who confirms all the documents and then on the basis of which the Registrar of Society grants the registration of society. The following are the main steps involved with the registration of a Society for establishing NGO in India:
STEP-I of Establishing NGO in India: Forming a group of minimum seven persons as desirous persons to form the said society.
STEP-II of Establishing NGO in India: Clearance of the name of the society from the Registrar concerned where the office of the society is proposed to be located.
STEP-III of Establishing NGO in India: Drafting of the deed of society as per the Society Registration Act 1860 and all other standing orders issued from time to time which contains the rules and regulations for running the society and the bye laws.
STEP-IV of Establishing NGO in India: Obtaining a NOC from the owner of the premises where the office of the society is proposed to be located.
STEP-V of Establishing NGO in India: Filing the proof of residence and identification of the desirous persons.
STEP-VI of Establishing NGO in India: Submitting the society documents alongwith all the relevant documents and the drafted deed before the registrar for registration.
STEP-VII of Establishing NGO in India: Issuance of the Registration Certificate by the Registrar of Society.
STEP-VIII of Establishing NGO in India: Obtaining a PAN card for the society from the Income Tax Department.
STEP-IX of Establishing NGO in India: Opening a bank account for the society for the regulation of funds of the society.
STEP-X: Getting the exemption under Section 80 (G) of the Income Tax Act for exempting the donations from taxation.
STEP-XI of Establishing NGO in India: Getting clearances from RBI for receipt of foreign funds in the society.
STEP-XII of Establishing NGO in India: Filing of ITR for the society after the end of the financial year.
A Registered Trust as NGO
Any legal entity can establish a Trust in India through a registered Trust Deed which becomes a legal entity . All activities of a NGO can be done through the aims and objectives of the said trust. The registration of Trust in India involves the following simple steps:
STEP-I of Establishing NGO in India: Selecting the name of the trust.
STEP-II of Establishing NGO in India: Drafting the Trust Deed which should contain all the important aims and objectives of the trust.
STEP-III of Establishing NGO in India: One settlor or trustee can also run the said trust however a board of trustees can be also named and several persons can be involved in the running of the trust.
STEP-IV of Establishing NGO in India: Getting the PAN card for the trust after its registration.
STEP-V of Establishing NGO in India: Opening a bank account for the trust after its registration.
STEP-VI of Establishing NGO in India: Getting the exemption under Section 80 (G) of the Income Tax Act for exempting the donations from taxation.
STEP-VII of Establishing NGO in India: Getting clearances from RBI for entitling the trust for receipt of foreign funds.
STEP-VIII of Establishing NGO in India: Filing of ITR of the trust.
Management of NGO:
Management of NGO is mainly in the hands of the persons who have formed it as per the bye laws and regulations prescribed by the government. Since most of the NGOs are run on government donated funds, some measures to ensure the appropriate expenditure of the funds given by the government are taken at the management level. Government also seeks the audit of the funds and the way in which the funds have been spent. This all is done in a transparent manner which provides a lot of operational freedom to the NGO to operate and achieve its goals. In most of such cases there is a provision in the bye laws that all the income, earning, movable & immovable properties of the NGO shall be solely utilized and applied towards of the promotion of its aims and objects as set for in the memorandum of association. No profit on there of shall be paid or transferred directly by way of dividends, bonus, profits or in any manner whatsoever to the present or future members of the society or any person, through any one or more of the present of the future members. No member of the society shall have any personal claim on any movable or immovable properties of the society or make any profit whatsoever by virtue of this membership.There is a large amount of freedom to run and operate the NGO, the government seeks the compliance of the spending of money by the NGO as per the terms of the grants.
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