Next Steps After NGO Trust Society Registration Under MCA

Immediately after registration, you must obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) for the NGO. These are required for all financial transactions and tax filings. Without them, you cannot open a bank account or receive donations legally.

Next, apply for registration under Section 12A and 80G of the Income Tax Act, 1961. Section 12A grants exemption from income tax on surplus funds, while Section 80G allows donors to claim deductions on their donations. Both applications are filed with the Commissioner of Income Tax (Exemptions) in your jurisdiction. Processing typically takes 3-6 months, so file immediately after registration.

You must also register under the Foreign Contribution (Regulation) Act (FCRA), 2010 if you plan to receive foreign donations. This is a separate application with the Ministry of Home Affairs. Without FCRA registration, accepting foreign funds is illegal and can lead to cancellation of your NGO's registration.

Every NGO registered as a trust or society must file annual returns with the Registrar of Societies or the Charity Commissioner, depending on your state. The specific form and deadline vary by state, but generally, you must submit audited financial statements and a list of managing committee members within 6 months of the financial year end (by September 30).

If your NGO is registered under Section 8 of the Companies Act (which is common for trusts/societies that later convert), you must file annual returns with the MCA using Form AOC-4 (financial statements) and Form MGT-7 (annual return). These are due within 30 days of the Annual General Meeting, which must be held within 6 months of the financial year end.

Additionally, you must file an income tax return annually using Form ITR-7, even if your income is exempt under Section 12A. The due date is October 31 for NGOs that are not required to audit, and November 30 for those that are. Late filing attracts a penalty of ₹1,000 per day under Section 234F.

To maintain Section 12A and 80G registration, you must ensure that your NGO's income is applied for charitable purposes. At least 85% of your income must be spent on the stated objectives within the financial year. If not, you must apply to the Income Tax Department for accumulation of funds for specific projects.

You must also maintain proper books of accounts. The Income Tax Act requires NGOs to maintain records of all receipts and payments, including donations, grants, and expenses. These records must be audited by a Chartered Accountant if your annual turnover exceeds ₹1 crore or if you have received foreign contributions.

Another critical requirement is filing Form 10B or 10BB, which is the audit report for NGOs. Form 10B is for NGOs with annual receipts exceeding ₹1 crore, while Form 10BB is for smaller NGOs. This must be filed along with your income tax return. Failure to file can result in cancellation of your 12A/80G registration.

If your NGO has FCRA registration, you must file an annual return in Form FC-4 by December 31 each year. This return includes details of foreign contributions received, their utilisation, and the balance remaining. The return must be audited by a Chartered Accountant.

You must also maintain a separate bank account exclusively for foreign contributions. This account must be with a branch of a scheduled bank authorised by the Ministry of Home Affairs. All foreign funds must be received and disbursed only through this account. Mixing foreign and domestic funds is a violation.

Additionally, you must ensure that foreign contributions are used only for the stated objectives. The FCRA prohibits using foreign funds for political activities, speculative investments, or activities that are against national interest. Any violation can lead to suspension or cancellation of your FCRA registration, and in serious cases, criminal prosecution.

Non-compliance with MCA, Income Tax, or FCRA requirements can result in severe penalties. For MCA filings, late filing attracts a fee of ₹100 per day per form. For income tax, late filing of ITR-7 attracts a penalty of ₹1,000 per day under Section 234F, and failure to file for more than one year can lead to cancellation of 12A/80G registration.

For FCRA violations, the Ministry of Home Affairs can suspend your registration for up to 180 days or cancel it permanently. During suspension, you cannot receive or utilise foreign funds. In cases of serious violations, the NGO's bank accounts can be frozen, and the managing committee members can be prosecuted under the FCRA.

State-level non-compliance, such as failure to file annual returns with the Registrar of Societies, can lead to the NGO being struck off the register. This means the NGO ceases to exist legally, and its assets may be transferred to the government. To avoid this, ensure all state-level filings are completed on time.

Review your NGO's current compliance status against the requirements mentioned above. If you have missed any filings, file them immediately to avoid penalties. For specific guidance on your state's requirements or complex compliance issues, consult a qualified professional such as a Chartered Accountant or a lawyer specialising in NGO law.

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This page provides preliminary information. It is not legal advice. For your matter, consult a qualified professional.