NGO Services

NGO stands for Non-governmental organization. NGOs are non-profit organizations that operate independently from the government and are often involved in advocacy or service work.

In India, non-governmental organizations (NGOs) can be registered as trusts, societies, or Section 8 companies. The type of legal formation an NGO chooses depends on its goals, scale of operations, and compliance requirements.

Comparison of Section 8 Company, Society, and Trust

Aspect	Section 8 Company	Society	Trust
Governing Law	Companies Act, 2013	Societies Registration Act, 1860	Indian Trusts Act, 1882 (for private trusts); Public Trust laws for public trusts
Primary Objective	Promote charity, education, arts, science, etc.	Promote cultural, charitable, and social activities	Charitable or religious purposes; public or private trusts
Legal Entity Status	Separate legal entity	No separate legal entity	No separate legal entity

Key Differences

• Legal Entity: Section 8 Company has a distinct legal entity, unlike a Society or Trust.
• Governance: Section 8 Companies are more professionally managed, while Societies and Trusts allow for simpler governance.
• Compliance: Section 8 Companies have stricter compliance and governance compared to Societies and Trusts.
• Credibility: Section 8 Companies enjoy higher credibility due to their legal structure and government oversight.

Important Certificates for NGOs

1. Section 80G Certificate

Purpose:

• Grants tax benefits to donors who contribute to charitable organizations.

Uses:

• Encourages donations by providing tax exemptions to donors.
• Enhances credibility and trustworthiness of the organization.

Benefits:

• Donors can claim a deduction of 50% or 100% of their donations (depending on eligibility under the Income Tax Act).
• Helps organizations attract more funding and support.

2. Section 12A Certificate

Purpose:

• Provides tax exemption to NGOs and charitable organizations on their income.

Uses:

• Certifies that the organization is engaged in charitable activities.
• Ensures that the income is exempt from tax under the Income Tax Act.

Benefits:

• Exemption from paying income tax on surplus income.
• Increases donor confidence.

3. Corporate Social Responsibility (CSR)

Purpose:

• Mandates companies (meeting specific criteria) to spend 2% of their average net profits on CSR activities.

Uses:

• Enables organizations to receive funding from corporates for projects under the CSR framework.

Benefits:

• Provides a significant funding avenue for NGOs.
• Increases visibility and potential collaborations for registered organizations.

Summary of Benefits for NGOs

Certificate	Key Use	Primary Benefit
80G	Attract tax-deductible donations	Encourages higher donations by offering tax exemptions.
12A	Exemption on organizational income	Tax savings and increased donor confidence.
CSR	Receive funds from corporates	Access to substantial funding for eligible projects.

At BizFinTax, we provide a complete guide on how to get government funding for NGOs. Please feel free to contact us to know more.