Formation and Registration of NGOs in India

     MSW Notes > NGO Management 

Question 1: Formation and Registration of NGOs in India?

Discuss about the procedure for registration of voluntary agencies under Indian Trusts Act, 1882? ( May 2019)

Explain the formation and registration procedure of Non-governmental organization? (September 2022)

Explain the formation and registration procedure of NGO in detailed manner. ( August 2023)

 

Introduction

Non-Governmental Organisations (NGOs), also known as voluntary agencies, play a vital role in social development by addressing gaps left by government initiatives. They work in fields such as education, health, women empowerment, environmental protection, and child welfare. For an NGO to gain credibility, access funds, and function legally, it must be formally registered under Indian law. The registration can be done under different legal frameworks such as the Indian Trusts Act, 1882, the Societies Registration Act, 1860, or as a non-profit company under Section 8 of the Companies Act, 2013.

This answer focuses mainly on the procedure under the Indian Trusts Act, 1882, while also providing a detailed overview of NGO formation and registration in general.

Voluntary Agencies and Indian Trusts Act, 1882

What is a Trust?

A trust is a legal arrangement in which the “author” or “settlor” of the trust transfers property or money to trustees, who then hold and manage it for the benefit of certain beneficiaries or for a charitable purpose.

·        Private Trusts: Benefit specific individuals or families.

·        Public Charitable Trusts: Established for welfare purposes such as education, relief of poverty, medical aid, etc. NGOs usually fall under this category.

Why Register a Trust?

·        Legal recognition as a charitable body.

·        Eligibility for tax exemptions (under Income Tax Act, Sections 12A & 80G).

·        Ability to open a bank account in the trust’s name.

·        Eligibility to apply for government or foreign grants.

Procedure for Registration of a Trust under the Indian Trusts Act, 1882

1. Selection of Name

The first step is choosing a unique name for the trust. The name should not infringe on trademarks or resemble government institutions.

2. Drafting the Trust Deed

A trust deed is the core legal document that defines:

·        The objectives of the trust (education, women’s empowerment, relief of poor, etc.).

·        Details of settlors and trustees.

·        Rights, duties, and powers of trustees.

·        Mode of appointment or removal of trustees.

·        Utilization of funds and property.

The deed must be executed on a non-judicial stamp paper, the value of which varies from state to state.

3. Minimum Members Required

·        At least two trustees are needed, though some states may require three.

·        Trustees must be of sound mind, adults, and not insolvent.

4. Submission to Registrar

The settlor and trustees must visit the office of the Charity Commissioner or Registrar of Trusts in the concerned state. Documents required include:

·        Signed trust deed (original + photocopy).

·        Passport-sized photographs of trustees.

·        Proof of registered office (rental agreement/ownership deed + NOC from landlord).

·        ID and address proof of trustees.

5. Verification and Registration

·        The registrar verifies the deed and documents.

·        Trustees must appear for verification with identity documents.

·        On approval, a Certificate of Registration is issued.

Example: Many prominent NGOs like the Aga Khan Foundation and Tata Trusts are registered under the Indian Trusts Act and operate large-scale social programs.

 

General Formation and Registration of NGOs

While trusts are common, NGOs in India can be formed under three main laws.

1. Registration under the Societies Registration Act, 1860

·        Definition: A society is an association of people united for literary, charitable, or scientific purposes.

·        Minimum Members: At least 7 persons.

·        Governing Document: Memorandum of Association (MoA) and Rules & Regulations.

·        Procedure:

1.     Choose a unique name.

2.     Draft MoA and by-laws.

3.     Submit documents with ID/address proof of members.

4.     Registrar issues Certificate of Registration.

·        Example: The Indian Red Cross Society is registered under this Act.

2. Registration under the Indian Trusts Act, 1882

·        Already explained above.

·        Best suited for charitable and religious purposes.

·        Popular for NGOs engaged in welfare programs at the community level.

3. Registration under the Companies Act, 2013 (Section 8 Company)

·        Definition: A Section 8 Company is a non-profit company formed to promote commerce, arts, education, research, charity, etc.

·        Features:

o   Requires at least 2 directors and members.

o   No distribution of profits (profits reinvested for objectives).

o   High credibility compared to trusts and societies.

·        Procedure:

1.               Obtain Digital Signature Certificate (DSC) for directors.

2.               Apply for Director Identification Number (DIN).

3.               File incorporation documents with Registrar of Companies.

4.               Central Government approval is required for license under Section 8.

                    Example: CII Foundation and Teach for India are Section 8 Companies.

 

Comparative View

Feature	Trust (1882)	Society (1860)	Section 8 Company (2013)
Governing Document	Trust Deed	MoA + Rules	MoA + AoA
Minimum Members	2 Trustees	7 Members	2 Members
Suitable For	Charitable & religious activities	Literary, cultural, scientific, charitable	Large-scale NGOs, high credibility
Authority	Charity Commissioner/Registrar	Registrar of Societies	Registrar of Companies
Compliance	Moderate	Moderate	High (strict reporting)

 

Importance of Registration for NGOs

1.     Legal Identity: A registered NGO can sue or be sued in its name.

2.     Banking & Contracts: Enables opening bank accounts and entering agreements.

3.     Tax Exemptions: Registered NGOs can obtain 12A and 80G certificates for donor tax benefits.

4.     Foreign Funding: Registration under FCRA (Foreign Contribution Regulation Act) requires the NGO to be legally registered.

5.     Credibility: Donors, corporations, and government agencies prefer funding registered NGOs.

 

Challenges in Registration Process

·        Bureaucratic Delays: Multiple visits to registrar offices.

·        Compliance Burden: Maintaining proper records, annual filings.

·        Legal Knowledge: Many grassroots groups lack resources to hire lawyers or accountants.

·        Regional Differences: Stamp duty, documentation, and processes vary across states.

Example: In some states like Maharashtra, trusts are regulated by a Charity Commissioner, while in others, the process is simpler but less structured.

 

Conclusion

The registration of voluntary agencies and NGOs is an essential step in strengthening the voluntary sector in India. The Indian Trusts Act, 1882 provides a straightforward route for forming charitable organisations, while societies and Section 8 companies offer alternative structures depending on the scope and scale of work.

For small community-based initiatives, trusts are most common. Societies are preferred by groups focusing on education, cultural, or scientific work. For large-scale professional NGOs with global linkages, Section 8 companies provide credibility and accountability.

Ultimately, the choice of structure depends on the NGO’s mission, resources, and long-term vision. Proper registration not only provides legal backing but also helps NGOs access funds, ensure transparency, and build trust among stakeholders — making them effective partners in India’s social development journey.