150+ Verified NGO & Society Registration Consultants — Section 8 Company, Trust, Society Formation, 12A, 80G, FCRA & CSR Compliance for Non-Profits Across India

What is the difference between a Section 8 company, Trust, and Society for NGO purposes?

A Section 8 Company is incorporated under the Companies Act 2013 — it has the strongest governance framework (MCA oversight, mandatory board, audited accounts), is most credible with institutional donors and corporates, provides limited liability to directors, and has perpetual succession. A Trust is registered under the Trusts Act — simpler formation, suitable for family philanthropy or specific purpose foundations, but perpetual succession requires careful succession planning. A Society is registered under the Societies Registration Act 1860 — democratic governance with elected managing committee, suitable for professional associations and community organisations, but management disputes are more common and governance is state-law regulated. Section 8 is preferred for professional NGOs seeking CSR and foreign funding; trusts for family foundations; societies for membership-based organisations.

Is 12A registration mandatory for an NGO to receive donations?

12A registration is not mandatory to receive donations — an NGO can receive donations without it. However, without 12A registration, the NGO pays income tax (at the applicable rate of 22-30%) on all income, including donations. This means a significant portion of every donated rupee goes to income tax rather than charitable purposes. Without 80G certification (which requires 12A first), donors cannot claim tax deductions on their donations — significantly reducing donor motivation, particularly for high-income individual donors and corporates using 80G deductions for CSR expense accounting. In practice, any serious NGO must obtain 12A and 80G to operate sustainably.

What are the FCRA 2020 amendments and how do they affect NGOs?

The Foreign Contribution (Regulation) Amendment Act 2020 introduced significant changes: all FCRA accounts must now be maintained exclusively at SBI New Delhi Main Branch (IFSC: SBIN0000691) — other bank accounts can be used for internal transfers but not for directly receiving foreign contributions; sub-granting (NGOs receiving FCRA funds and passing them to other NGOs) is severely restricted — sub-granting is permitted only to other FCRA-registered organisations with prior MHA approval; and administrative expense funded from foreign contributions is capped at 20% (reduced from previous 50%). These amendments significantly increased compliance burden and reduced operational flexibility for civil society organisations receiving foreign funding.

What is NGO Darpan and why is it mandatory?

NGO Darpan (ngoregistration.nic.in) is the government portal for registration of voluntary organisations, NGOs, and civil society organisations in India, maintained by NITI Aayog. Darpan registration is mandatory for: receiving government grants (from any central government ministry or department), receiving CSR funds from Section 135 companies (CSR-1 form requires Darpan ID), and applying for specific government schemes and programmes that support civil society. The Darpan portal also provides a level of transparency and accountability by displaying the organisation's registration, 12A/80G status, and activities. Darpan registration is free and relatively straightforward — there is no reason for any registered NGO not to maintain an active Darpan profile.

How much can an NGO spend on administrative expenses from donations?

For income tax purposes under Section 12A, there is no prescribed limit on administrative expenses — the requirement is that the majority of income must be 'applied' for charitable purposes. For FCRA-regulated foreign contribution, administrative expenses are capped at 20% of total foreign contribution received. For CSR-funded activities, Section 135 companies typically specify in their CSR policy that administrative or overhead expenses paid to implementing NGOs should not exceed 5-10% of project cost (though the CSR rules do not specify a legal maximum). Best practice for serious NGOs is to keep administrative expenses below 20% of total expenditure (including for domestic funds) — this is the threshold at which most institutional donors start querying expense ratios.