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Types of NGO Registration in India and Its benefits

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  Posted on August 19, 2021

Types of NGO Registration in India and Its benefits

NGOs are non-profit organizations that are independent of the government. However, they may be funded by government and international government organizations.

NGOs aims to support the underprivileged primarily and also aims at creating awareness of things that are often ignored in our society. NGOs are active in education, public policy, health care, human rights and other areas based on their objectives.

  • They are self-governing bodies that seek to work for the betterment of the society by helping the poor and needy;
  • The primary goal of an NGO is to assist the underprivileged people and allow them to grow.

Different types of NGO Registration in India

As we have discussed above, 3 laws regulate the functioning of NGOs registration process; similarly, there are 3 types of NGO registration. They are as follows:

  • Trust Registration;
  • Society Registration;
  • Section 8 Company.

Trust Registration

The registration for trust can be completed via the Indian Trust Act, 1882. These are usually formed when the land or property is involved in public charitable trusts. Typically, the usage of faith is for the relief of medical aid, education, poverty, etc.

Benefits of Trust Registration

  • Trusts can get land from the government Agencies
  • In a maximum of the states, there’s no law that governs Public Charitable Trusts in India. However, many states such as Madhya Pradesh, Maharashtra, Gujarat, and Rajasthan do have Public Trusts Act.
  • An NGO registered under the Trusts Act can practice the word “Govt. Regd.” or ‘Regd.’
  • They get quite a few tax benefits such as Income Tax, etc
  • 80G certificate advantage under the Income Tax Act
  • Trust can get White capital for Building construction.
  • Benefits in Entertainment Tax and Service Tax, etc

2. Society Registration:

An additional way in which you can register NGO is in the system of society. As stated in Section 30 of the Society Registration Act of 1860, the individual comes together to promote scientific purpose, charitable purpose, and various other objectives to form a society.

Benefits under Society Registration

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

Exemption from income tax:
Society registration is a kind of NGO registration where the firm is saved from paying income taxes, and Income Tax exemption is something everybody desperately seeks for.

Separate legal identity:
NGO is a separate legal entity in the eyes of the law, which is one of the significant advantages that come with society registration. Each member of this society is accountable for their actions only. The members of such NGOs are responsible only for the activity undertaken by them and not by other members because of the distinction given.

Limited Liability:
Society NGO is a separate legal entity from its members. Thus the liability of the members is limited to their share only. That means, in no circumstances, the members’ assets cannot be utilized to pay the firm’s liabilities. Since society NGOs are a separate legal identity, members’ responsibility is limited to their share only.

Legal protection:
You will be provided with legal protection, once you have registered your society under the Society Registration Act, 1860. It indicates that no other company or people can use your company name, your assets, etc. Anybody would be subject to punishment if found liable for any violation.

3. Section 8 Company Registration:

The third method to register an NGO is by Section 8 of the Indian Companies Act, 2013. These companies are recognized to protect trade, religion, charity, etc. Nevertheless, the earnings of this company are used by the company for promotion work, not used by the shareholders. You can register the company as a private limited company (needs two directors) and a public limited company (requires three directors).

Benefits of Section 8 company registration

NGOs registering themselves under Section 8 company registration can gain various advantages from it.

Those are as follows:-

No minimum capital requirement:
There is no minimum capital requirement for creating NGO as per section 8 company. Unlike other existences such as public limited company, section 8 companies have no prescribed limit for any minimum capital necessities. However, the capital structure of the firm can be modified at any stage, which may be needed for the growth of the business.

Separate legal entity:
Comparable to the trust, a Section 8 company also gets the special recognition of a ‘separate legal entity.’ Like Private Limited and other limited companies, a Section 8 company, too, continues its own identity and possesses its separate legal entity from its members. Furthermore, Section 8 Company has continued survival.

Tax exemption:
One of the advantages that every NGO receives is the benefit of tax. Aside from the stakeholders, the NGOs’ contributors can also receive tax exemption for the donation given to the NGO. It’s one of the most significant advantages that NGOs registering under Section 8 Companies are presented with, especially those subscribing to section 8 companies. Even the contributors can claim the tax exemption upon the donation made to this pattern of NGO.

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