Statutory compliance for ngo in india

Statutory Compliance for NGO after its registration

We have already discussed in this post about how to form NGO. After forming NGO in India, there are statutory compliance for NGO, which requires utmost care. Let us discuss all in detail, one by one.

PAN

After registration of NGO with State Charity Commissioner or Collector or Society Registrar, first thing is to apply for PAN of NGO. It is compulsory to apply for PAN after registration of NGO. You can apply PAN online through this website.

Registration u/s. 12A of Income Tax Act

Commonly known as 12A certificate, this registration is NOT mandatory. Purpose of getting this registration u/s. 12A is to get exemption from Income Tax on the Income of the trust, if all the conditions laid down in this section are fulfilled. You can check detail procedure here how to apply for 12A certificate.

Registration u/s. 80G of Income Tax Act

Again, this is NOT a mandatory one. However to give benefit of 50% or 100% exemption on donation to our donors, it is per-requisition to get the registration u/s. 80G of Income Tax Act. It is indirectly benefited to NGOs to raise funds. Go through this post for detail procedure to get 80G Certificate.

FCRA Registration

If there are possibilities to receive Foreign Funds for projects of NGO, a registration with FCRA department, Ministry of Home Affairs is compulsory. Without FCRA registration, NGO cannot receive any foreign donation or grants. Check more FAQs on FCRA here.

TAN

During the working of NGO at any point of time, if NGO become liable to deduct tax from source, it has to first apply for TAN. Like PAN , TAN application can be made online thought this website.

Service Tax Registration

Only when NGO is providing services like consultancy work or research activity etc… and if gross revenue from such activity cross the basic exemption limit of service tax, then NGO has to first apply for Service Tax Registration number. Again it is an online procedure and you can apply for registration here.

Professional Tax

Professional Tax is a liability of NGO to deduct from the salary of employee and deposited to Government. Professional Tax is State Government look out and thus different states of India having different rules for Professional Tax.

Retirement Benefit

Retirement benefits like Provident Fund, Gratuity, ESIC etc.. is applicable to NGO when it grow up and having employees more than prescribed limit in this acts.

Summary

Depending upon the work and size of NGO, you can either apply for all the above statutory compliance immediately after registration of NGO or you can apply as and when requirement arises.

8 replies
  1. LAKSHMI NARAYANA NAGISETTY
    LAKSHMI NARAYANA NAGISETTY says:

    It is informative and certainly useful for the NGOs. In addition to the above, pl add the following as:

    1. Registration with Planning Commission, GOI (with change one) NGO Partnership System.

    2. Tax Exemption under 35 AC.

    3. Registration under the National CSR HUB.

    Looking forward for better connectivity.

    All the best.

    Reply
  2. N L Narayana
    N L Narayana says:

    The employees at NGOs get honorarium around 5,000 to 10000 will come under the provision of professional tax. This payments are not regular. Clarification helps NGOs to do the needful.

    Reply
    • Jahir Mansuri
      Jahir Mansuri says:

      PT is a local tax and governed by state departments. So if you are in a state where PT is there and it is as per slab. yes.
      For taxes, honorarium is not clearly define. Either it can be treated as SALARY so PT is to be deducted or it can be treated as CONSULTANCY so TDS is to be deducted. No other option.

      Reply
  3. N L Narayana
    N L Narayana says:

    It is heard that Tax Exemption under 35AC is valid upto 31st March 2017. Will it be closed or someother section will be continued to continue the tax exemption. Please clarify.

    Reply
    • Jahir Mansuri
      Jahir Mansuri says:

      Yes as per Finance Act, 35AC exemption is going to abolished from 01.04.2017. However, off the record we are getting news, that there may be some categories or activities will continue giving 100% exemption to their donor. Mostly, some circular or notification will be released by government.

      Reply
  4. N LAKSHMI NARAYANA
    N LAKSHMI NARAYANA says:

    As the Planning Commission has been changed as NITI Aayog, every NGO should updated the details in NGO DARPAN if already registered in Planning Commission or get registration under NGO Darpan. After the completion of such process, the NGO will get NGO Unique ID. This is mandatory as it is mandatory and required for applying for various schemes of selected Ministries.

    Reply

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