Establishing an NGO in India is a two-step process: –
- Register your NGO/Trust: – The first step in setting up is to get your trust registered. You have two options-
a. Register as a Section 8 Company OR
b. Register under the respective law of your state.
Nowadays, people prefer a Section 8 company as the entire set up process is online and it gets done in a matter of 15 days as compared to the other option which takes 3–4 months. To just give you some perspective, Reliance Foundation is a Section 8 Company.
The best structure you can use while starting a Non-Profit is an entity registered
under your State Lawsunder Section 8 of the Companies Act, 2013
- Apply for an Income Tax exemption: – Once step 1 is done, you need to open your Bank account and apply for an Income Tax exemption or a 12A certificate as it is popularly known. This certificate will exempt all the donations you receive from Income tax. Although donations are tax free, you need to get registered with the Income tax department to ensure that the donations aren’t taxed.
Once steps 1 and 2 are completed, you can start your operations as a trust.
Note: You can apply for an 80G certificate once you have completed at least 6 months of activity so that it ‘ll be easier to get approval.