“Non-Governmental Organizations” are commonly referred to as NGOs and are usually a non-profit making organization that generally operates independent of any Government. The purpose of NGOs is to address the social issues. Its activities include but are not limited to environmental sustainability, social empowerment of the deprived, educational and cultural development, animal welfare, human rights, consumer rights etc. There are some of the top NGOs that have made considerable social impact in India and are internationally recognized.
NGO can generally register itself as a legal entity in three ways in India and which are as following; Trust, Society and Section 8 Company under Companies Act, 2013. Some of the Acts that may be applicable to an NGO in India: Indian Trusts Act, 1882; Societies Registration Act 1860; Companies Act, 2013; Income Tax Act, 1961; Charitable and Religious Trusts Act 1920, Foreign Contribution (Regulation) Act, 2010; etc.
The NGO shall register itself under Section 12A and 80G of the Income Tax Act, 1961 which is not mandatory but it is for the purpose of getting some benefits and exemptions and shall also register itself under Foreign Contribution (Registration) Act, 2010, if there are possibilities to receive foreign funds for projects of NGO.
The NGOs are subjected to various laws and regulations failing which can cause consequences. The Government cancelled the FCRA Licenses of nearly 5,000 NGOs in India as they violated the provisions of FCRA (Foreign Contribution Regulation Act), as they failed to file annual returns for three consecutive years, inadequate reporting of the receipt and utilization of all the foreign funds inflows, inadequate reporting of assets and liabilities, etc. The government has also suspended the FCRA License issued to the most renowned NGO in India and froze their seven bank accounts for various alleged violation of laws. The Government also ordered that funds coming from one of the US-based NGO should not be released by any bank to any Indian NGOs without mandatory permission from the Home Ministry.
It is evident that all the NGOs need to pull up the socks and start complying with the letter and spirit of law which shall continue to add value to their organization.