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Comparative Statement for
Forms of Registration for NGOs
in India
S.Bheema Rao
Faculty-Microfinance
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Comparative Statement for Forms of
Registration for NGOs in India
Description Society Trust Company
1.Act under which
is Registered
The Society
Registration
Act,1860
The Registration
Act,1882
The Companies
Act,1956
2.Ease of
Formation Relatively simple.It may take 1-2
months
Very simple, It maytake a week Relativelycomplicated. It
may take 3-6
months
3.Authority with
whom to be
registered
Registrar of
Society of
concerned state
Sub registration of
Registration
Registrar of
Societies of the
concerned state4.Approval of
Name
Separate
application is not
required ,Name
generally granted if
available
Not required Separate
application is
required to be
made .There are
strict guidelines for
approval of name
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Comparative Statement for Forms of
Registration for NGOs in India
Description Society Trust Company
5.Minimum No.
of subscribers /
Trustee requires
7 ( Seven) 2 (Two) 2 (Two)
6.Cost of
registration
Less than
Rs.10000.00
Less than
Rs.10000.00
Less than
Rs.25000.00
7.Governing
Structure
Two tier structure
a. General Body
b. Executive
Committee
Single structure
the trustees are the
ultimate authority
Two tier structure
a. General Body
b. Board of
Directors
8. Voting Rights All members haveequal rights
All members haveequal rights
The voting rights mayvary on the basis of
share holdings. The
provision can be used
for control purposes
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Comparative Statement for Forms of
Registration for NGOs in India
Description Society Trust Company
9. Types of
activities allowed
No much of a
difference between
these 3 forms. Any
kind of charitable
and public utility
activity can be
under taken
Same Same
10. Annual
Documents to be
filled
The Act requires a
list of management
body to be filled
every year. But
different states
have different
requirements for
filling additional
documents
No documents are
required to be filled
Annual returns and
audited accounts
are required to be
held every year
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Comparative Statement for Forms of
Registration for NGOs in India
Description Society Trust Company
11. General and
Board meetings
General and Board
meetings are
required to be held
as prescribed in the
bye law of the
society
No provisions are
laid down.
Adequate rules
should be framed
in the trust deed, in
this regard.
Specific provisions
have been laid
down. At least 1
Annual General
Meeting and 4
Board meetings are
required to be held
every year.
12. Transfer of
Ownership
Membership not
transferable
Membership not
transferable
Membership can be
transferred
13.Payment to
functionaries
Permitted as the
general body may
decide
Provision in the
trust deed should
be there for any
such payment
Permitted as the
general body may
decide
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Comparative Statement for Forms of
Registration for NGOs in India
Description Society Trust Company
14. Recurring
expenditure
The statutory
compliances
required are
minimal.
No statutory
recurring
expenditure
Annual returns and
Balance Sheet are
filled along with
certain fees.
15. Area ofOperation
Can operatethroughout India
even if registered
in one particular
state. No separate
registration is not
required
Can operatethroughout India.
Can operatethroughout India as
the registration is
granted by the
Central
Government
16.Income Tax
Registration
Compulsory within
12 months of
registration
Compulsory within
12 months of
registration
Compulsory within
12 months of
registration
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Registration of Society
Memorandum of Association in duplicate alongwith a certified copy. It
should be neatly typed and pages serially numbered.
Rules and regulations/Bye-laws in duplicate duly signed.
Affidavit on non-judicial stamp paper of appropriate value sworn by thePresident or Secretary of the society stating the relationship between the
subscribers. The affidavit should be attested by an oath commissioner,
Notary Public or Magistrate 1st class.
Documentary proof such as House Tax receipt, rent receipt in respect of
premises shown as registered office of the society or no-objectioncertificate from the owner of the premises.
Covering letter along with the requite fees, requesting the Registrar for
registration
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Certificate of Registration
The registrar of Societies will verify and process
the above mentioned documents.
After satisfying himself about the complianceof the provisions of the relevant Act and the
correctness of the Registrar will issue a
certificate of registration
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Acceptance of Foreign Contributions
Acceptance of foreign contribution by MFIs registered under
the Societies Registration Act 1860 is regulated by the
Foreign Contribution (Regulation) Act 1976 (FCRA).
MFIs need to make applications in form FC-8 of FCRA tothe Secretary, Ministry of Home Affairs, New Delhi.
Once registered with the Ministry of Home Affairs, these
organizations have to agree to receive such foreign
contribution only through one of the branches of a bank as itmay specify in its application for registration.
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Taxation
Section 11 of the Income Tax Act, exempts the income of charitable
societies from the charge of tax on the fulfillment of certain conditions.
Sections 12, 12A, 12AA and 13 and certain clauses of section 10 of
IncomeT
ax Act also govern the issue of taxation of such organizations. Since the object of microfinance may be considered a charitable function,
local assessing officers of the Income Tax Department often exempt the
income from microfinance activities from income tax. However MFIs
need to apply to the income tax authorities to get this exemption. The
wealth of the societies however, is subjected to Wealth Tax at 1% of the
net value of the wealth with a basic exemption of Rs15 lakhs.
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NGO MFI ; Issues and Challenges
Operational Issue (Scale of outreach)
Geographical Coverage
Range of Products and Services offered ( specially Saving product)
Increase Number of Clients served
Professionalism in HR and other systems & polices
Financial Issues (Sustainability)
Equity capital
Commercial Capital
Grants / Funds through FCRA
Financial Self sufficiency
Institutional Issues ( Governance & legal) Governance ( Ownership & Board formation)
Mission Drift from Social to Business
Taxation and Transparency in Standard Reporting
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Conclusion
Now a days so many NGOs are transforming
from NGO-MFI to NBFC with the aim of
OUTREACH & SUSTAINABILITYBest example :
SKS Microfinance
Spandana MicrofinanceShare Microfinance
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Thank You