New Delhi | Mumbai | Noida | Gurgaon Presented By : Suhel Goel FCA, CPA, B.Com (Hons.), D.I.S.A suhel.goel@sunilgoel.com | +91 98100 09646 The document discusses various aspects of establishing and managing an NGO in India including pathways to establish an NGO, laws and compliances applicable to NGOs, the Foreign Contribution Regulation Act, Maharashtra Public Trusts Act, Lokpal and Lokayuktas Act, and developments in the NGO domain. Key points discussed include registration requirements for trusts, societies, and section 8 companies, annual reporting time

1. New Delhi | Mumbai | Noida | Gurgaon

2. New Delhi | Mumbai | Noida | Gurgaon
Presented By : Suhel Goel
FCA, CPA, B.Com (Hons.), D.I.S.A
suhel.goel@sunilgoel.com | +91 98100 09646

3. PREFACE
A Portal setup by the NITI Aayog in association with National
Informatics Centre to bring about greater partnership between
government & voluntary sector (http://ngo.india.gov.in/)
•What is NGO Darpan? How does an NGO apply for Government grants?
Anna Hazare started an indefinite hunger strike on 5 April 2011
to pressurize the government to create an ombudsman with the
power to deal with corruption in public places as envisaged
under the Jan Lokpal Bill.
•What is Lokpal and Lokayuktas Act? What are the reporting requirements of an
NGO?
In 2013-14, Delhi had received the highest amount of funding
from the foreign donors, but in 2014-15, it registered a dramatic
decline by almost 50 per cent in 2014-15. The Indian
Government is becoming more vigilant for foreign funding.
•What is FCRA? How do you ensure a regular and compliant flow of foreign funds
into your NGO?
3

4. AGENDA
Pathways to Establish an NGO
Compliances and Reporting Timelines under -
Foreign Contribution (Regulation) Act, 2010
Maharashtra Public Trusts Act, 1950
Lokpal and Lokayuktas Act, 2013
Income Tax Act , 1961
Government’s Partnership with NGOs
Developments in the NGO Domain
Q & A Session
4
Disclaimer: Information presented in this document is considered private & proprietary information (unless otherwise noted) and may not be distributed or copied.
We strongly recommend that you seek professional guidance and opinion before acting in any way on the proposals. While SGA makes every effort to provide
accurate and complete information, various proposals may change subsequently. SGA welcomes suggestions on how to improve our services and correct errors if
any. SGA provides no warranty, expressed or implied, as to the accuracy, reliability or completeness of furnished information.

5. PATHWAYS TO ESTABLISH AN NGO
FORMATION
OF NGO’s
SOCIETY
TRUST
SECTION 8
COMPANY
5

6. PATHWAYS TO ESTABLISH AN NGO
PARTICULARS TRUST SOCIETY SECTION 8
COMPANY
Governing Statute Relevant State Trust Act
or Indian Trust Act, 1882
Societies Registration Act,
1860. Many states,
however, have variants on
the Act.
Companies Act, 2013
Registration Document Trust deed. Memorandum of
Association and/or Rules
& regulations
Memorandum and
Articles of Association
Control Low Low High
Foreign Investment Tough Easy Easy
Members Required At least two trustees are
required to register a
public charitable trust.*
Minimum – Seven Minimum - Two
Cost factor Low Medium High
FCRA Less preferred Less preferred Most preferred
6
*The limits may vary in certain states in India.

7. PATHWAYS TO ESTABLISH AN NGO
PARTICULARS TRUST SOCIETY SECTION 8 PRIVATE
COMPANY
Change in Board of
Directors/ Trustees/
Members
Easy Easy Easy
Change of Registered
office
Easy Easy Easy
Transparency in
working
Low Low High - as everything is
available online.
Registration with
Income Tax u/s. 12A &
80G
At par with Society &
Section 8 Company.
At par with Trust &
Section 8 Company.
At par with Trust &
Society.
7

8. LAWS APPLICABLE TO NGOs- COMPLIANCE CHECKLIST
S. NO. GOVERNING LAW TASK
1 The Societies Registration Act, 1860
Filing of Annual Report
Filing of Details of Managing Body
2 Maharashtra Public Trust Act, 1950
Filing of Annual Report
Filing of Audited Accounts
Filing of Income & Expenditure Statement
Filing of Annual Budget
4
The Foreign Contribution (Regulation) Act,
2010
Prior Permission
Registration in Form FC-3
Annual Return in Form FC-6
Renewal of Registration
5
Labour Laws
(PF, ESIC, Shops & Establishment Act
to the extent applicable)
Payment
Return
6 Profession Tax
Payment
Return
7 Income Tax Act, 1961
Registration u/s 12AA & Approval u/s 80G
TDS - Payment
TDS - Return
Filing of Income tax return
Filing of Form 10B, 10, 9A* (as applicable)
8

9. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010
Introduction
Applicability
Prior Permission
Registration
Renewal
Amendments as per FCRR, 2015 and Finance Act 2016
Other Compliances and their Deadlines
F
C
R
A
9

10. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010- INTRODUCTION
1969
•Home Minister raised the issue of regulation of foreign funding into India.
•The intention was to prevent the onslaught that would follow due to foreign funding, which
would have had an influence on the functioning of the Government, Political Parties and
Other Institutions in India.
1976-2009
•Foreign Contribution (Regulation) Act, 1976 was enacted and continued to function for
several years until shortcomings were noticed.
•Certain Amendments were carried out in the aforesaid Act from time to time.
•However, a complete overhaul of the provisions was recommended towards the mid 2000s
and accordingly a Bill was proposed in the parliament for this purpose in the year 2006.
2010-2016
•FCRA, 2010 was enacted with an aim to -
•Regulate the acceptance and utilization of Foreign contribution or Foreign hospitality
•Prohibit any activities detrimental to the national interest and for matters connected
therewith
•With a view to streamline the functioning and digitise the filing various amendments were
proposed vide the Foreign Contribution (Regulation) Amendment Rules, 2015.
10

11. Definition: Foreign Contribution
FOREIGN CONTRIBUTION (REGULATION) ACT, 2010
Included
•Donation
•Delivery or transfer of any
article
•Currency
•Foreign Security
•Income generated from Foreign
Contribution. Eg - Interest
Excluded
•Fee
•Towards cost in lieu of goods or
services
A person may receive any foreign source, either directly or through one or more
persons.
11

12. Definition: Foreign Source
FOREIGN CONTRIBUTION (REGULATION) ACT, 2010
Included
•Government of any foreign
country or its Agency
•Foreign company or corporation
•Foreign Trust /Foundation
/Trade
Union/Society/Club/Other AOI
•Citizen of a Foreign Country*
Excluded
•United Nations or any of its
specialised agencies, the World
Bank, International Monetary
Fund
•Indian Company with more than
50% foreign shareholding
•Non Resident Indian*
12

13. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 - WAY FORWARD
13

14. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 - PRIOR PERMISSION
Any person may make independent and separate applications for prior permission for
different projects simultaneously. However, re-application for the same project can
not be made before the expiry of six months from the date of submission.
14
•be registered under the Societies
Registration Act, 1860 or the Indian Trusts
Act, 1882 or Section 8 of the Companies
Act, 2013 etc;
Registered
•submit a specific commitment letter from
the donor indicating the amount of
foreign contribution and the purpose for
which it is proposed to be given; and
Commitment
Letter
•submit copy of a reasonable project plan
for the benefit of the public for which the
foreign contribution is proposed to be
utilised.
Project Plan

15. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 - REGISTRATION
A person should
•Be registered under the Societies Registration Act, 1860 or the Indian Trusts Act, 1882 or Section 8 of the
Companies Act, 2013 etc.;
•Normally be in existence for at least three years; and
•Should normally have spent at least Rs 10,00,000/- over the last three years on its activities
•Submit copy of a details of Activities carried on during the last three years.
Caution Points
•Should not transfer fund to other organisations who are not registered under FCRA without permission
•Should not intermingle domestic funds with foreign contribution
15
Any person may transfer foreign contribution to any other person, ONLY if the latter
party is registered under FCRA.

16. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 - RENEWAL
Renewal
•Registration Certificate renewal due
after every five years.
•Organizations which were
registered under Foreign
Contribution (Regulation) Act, 1976
should have applied for Renewal by
now
Documents
•The registration certificate under
the statute of incorporation.
•Charter Documents
•Copy of FCRA Registration
Certificate which is being sought to
be renewed.
16
• A person should normally apply for renewal of Registration Certificate alteast six -
nine months before its expiry.
• Before filing such application, you should verify that particulars submitted at the
time of inception match with those being submitted for renewal.

17. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 - AMENDMENTS
S
No.
Old Provisions New Provisions
1 Applications of Registration (FC-3) and Prior
Permission (FC-4) filled online with subsequent
hard copy submission.
Form FC-3 for Registration & Prior Permission – To
be submitted online only.
2 Renewal of Registration Certificate through
Offline Form FC-5
Renewal through Online Form FC-3.
3 Hard copy of the applications - signed and
submitted with the Ministry.
Applications are now digitally signed - uploading
image of sign & stamp.
4 Hard copies of the attachments filed with
applications - to be submitted within 30 days
of the online submission.
The self-certified copies of required attachments
are now scanned and attached online.
17
Amendments were recently introduced through Foreign Contribution (Regulation)
Amendment Rules, 2015 and Finance Act, 2016.

18. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 - AMENDMENTS
S
No.
Old Provisions New Provisions
5 Fee paid through Demand Draft /Banker’s
Cheque - filed and submitted with
attachments.
Fee is now paid through online payment gateway.
6 Correspondence with the Ministry made
through letters and personal visits.
Queries are now ordinarily handled through
emails and a monthly meeting with the Director.
7 Offline Form FC-6, along with audited
statements of accounts by 31st December every
year.
Online Form FC-4 along with audited statements of
accounts by 31st December every year.
18

19. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010- AMENDMENTS
S
No.
Old Provisions New Provisions
8 • If Registration or Prior Permission is
granted, and
• There is a receipt of Foreign Contribution in
a F.Y in excess of One Crore rupees, or
equivalent then
• Summary data on Receipts and Utilization
of the foreign contribution to be displayed
in the public domain involving the year of
receipt as well as for one year thereafter.
• If Registration or Prior Permission is granted,
then place the audited statement of accounts
for F.Y on official website or on the website as
specified by the Central Government.
• A person receiving foreign contribution in any
quarter of the financial year shall place details
of receipt within 15 days following the last day
of the said quarter clearly indicating the details
of donors, amount received and date of receipt
on its official website or on the website as
specified by the Central Government.
19

20. FOREIGN CONTRIBUTION (REGULATION) ACT, 2010-OTHER COMPLIANCES
Change needs to be reported within 15 (fifteen) days through filing of Form FC- 6.
Name
Address
Nature, Aims or Objects
Bank/Branch/Account
Key Members*
Changes to be
reported
20

21. MAHARASHTRA PUBLIC TRUSTS ACT , 1950
Applicability
Procedure for Registration
Intimation of Change
Filing of Annual Budget
Renewal
Maharashtra Public Trusts (Amendment) Act,
2016
21

22. MAHARASHTRA PUBLIC TRUSTS ACT , 1950 - APPLICABILITY
All societies registered under the S.R. Act, 1860 are converted into public trust under
M.P.T. Act, 1950 after necessary inquiry and following the procedures as defined in the
rules.
Applicable on:
22
•All Societies and Public Trusts,
includes a temple, math, a wakf,
church, synagogue, agiary or other
place of public religious worship
Status
•Maharashtra.
•It is also applicable in Gujarat albeit
with certain variations in the
provisions in the two States
Location

23. MAHARASHTRA PUBLIC TRUSTS ACT , 1950 – PROCEDURE FOR REGISTRATION
Check Points:
23
1
•The application to be submitted at the Office of the Charity
Commissioner having jurisdiction over the region/sub-region of
the state in which the trust is to be registered.
2
•The application should be made within 3 months from the date
of execution of charter document, in the prescribed form
3
•An affidavit alongwith consent letter to be submitted as well
alongwith other prescribed documents.
In Mumbai, registration can be done at the office of the Charity Commissioner which
is at Worli Naka, Mumbai-400 018.

24. MAHARASHTRA PUBLIC TRUSTS ACT , 1950 – INTIMATION OF CHANGE
24
1
•It is mandatory to inform any change which occurs in the trust in
respect of the trustees, moveable or immovable properties etc.
within a period of 90 days
2
•The change so informed is necessary to be recorded on
satisfaction of its legality and validity to the authority
3
•A change report should be filed with the department in the
prescribed Schedule III..
To Dos:
Organization's with FCRA Registration/Prior permission need to report the change
within 15 days of receipt of order*.

25. MAHARASHTRA PUBLIC TRUSTS ACT , 1950 – FILING OF BUDGET
25
1
•If annual income exceeds 5,000/- for public religious trust and
10,000/- in other cases
2
•Prepare a budget in the form of Schedule VII-A. File the budget by
28th/29th February every year.
3
•Accounts need to be maintained through Schedule VIII (Balance
Sheet) and Schedule IX (Income and Expenditure A/c)
Things to Do:

26. MAHARASHTRA PUBLIC TRUSTS ACT , 1950 – RECENT AMENDMENT (2016)
Must Knows:
 The Deputy or Assistant Charity Commissioner may, de-register
the trust on the following grounds :
(a) when its purpose is completely fulfilled; or
(b) when its purpose becomes unlawful; or
(c) when the fulfillment of its purpose becomes impossible
by destruction of the trust-property or otherwise; or
(d) when the trust, being revocable, is expressly revoked; or
(e) when the trustees are found not doing any act for
fulfilling object of the trust.
26
The Maharashtra Public Trusts (Amendment) Act, 2016 came into force on the 23rd
February 2016

27. LOKPAL AND LOKAYUKTAS ACT, 2013
Introduction
Applicability
Compliances and their deadlines
27

28. LOKPAL AND LOKAYUKTAS ACT, 2013 - INTRODUCTION
 The Lokpal and Lokayuktas Act, 2013, commonly known as The Lokpal Act, is an anti-corruption Act of
Indian Parliament in India which "seeks to provide for the establishment of the institution of Lokpal to
inquire into allegations of corruption against certain public functionaries and for matters connecting
them”.
28

29. LOKPAL AND LOKAYUKTAS ACT, 2013 - APPLICABILITY
29
1
•It shall apply to public servants in and outside India.
2
•Includes any person who is or has been a director, manager,
secretary or other officer of every other society or association of
persons or trust (whether registered under any law for the time
being in force or not) *
3
•*if the organisation is in receipt of any donation from any foreign
source under the Foreign Contribution (Regulation) Act, 2010 in
excess of ten lakhs rupees in a year or such higher amount as the
Central Government may, by notification, specify.
Efforts are going on to exclude Board Members from the definition of Public Servants.
Important Points:

30. LOKPAL AND LOKAYUKTAS ACT, 2013 – COMPLIANCES AND THEIR DEADLINES
30
1
•Have to disclose their personal assets and liabilities.
2
•In case spouse is also required to file a return, he/she shall file a
return separately and mention the same in the said return. In
case, spouse has procured the assets out of his/her own income, it
shall still be mentioned in the said return.
3
•Immovable property includes property which has been inherited
by him/her.
DISCLOSURE REQUIREMENTS:
He/she may not disclose an asset if the value of such asset does not exceed two
months of his/her basic pay or rupees two lakhs, whichever is higher.

31. LOKPAL AND LOKAYUKTAS ACT, 2013 - APPLICABILITY
31

32. LOKPAL AND LOKAYUKTAS ACT, 2013 – COMPLIANCES AND THEIR DEADLINES
 31st December 2016 for this year.
 If a public servant willfully or for the reasons which are not justifiable, fails to declare his assets or gives
misleading information in respect of such assets and is found to be possession of assets not disclosed
or in respect of which misleading information was furnished, then, such assets shall, unless otherwise
proved, be presumed to belong to the public servant and shall be presumed to be assets acquired by
corrupt means.
This shall be done through Form I-IV before 31st December 2016 for FY 2015-16. From
FY 2016-17 onwards, the declaration shall have to be filed within four months after
the end of that financial year.
32
DISCLOSURE DEADLINE:

33. INCOME TAX ACT, 1961
Corpus Fund
Anonymous Donations
Utilization of Funds
Commercial Receipts
33

34. INCOME TAX ACT, 1961 – CORPUS FUND
Foreign Contribution received needs to be split into corpus and non corpus fund and
shown separately in Schedule VC of ITR 7.
34
1
•Donations made with a written direction from the donor that the
donation made shall be treated as part of the corpus of the trust
are not included in the total income of a trust or institution.
2
•It shall be shown separately in Schedule VC and Schedule J of
ITR-7.
3
•Interest earned on investment of Corpus Fund will be treated as
income of a trust or institution. Such income may be applied to
charitable purposes, thereby saving it from income tax.
Key Elements:

35. INCOME TAX ACT, 1961 – CORPUS FUND & ANONYMOUS DONATIONS
Anonymous donations are exempt to the extent of 5% of total income or Rs 1 lakh
whichever is higher.
35
1
•The specific direction generally should be accompanies with the
corpus donation. However, it is not a mandatory requirement. Any
direction given subsequently may also be treated as valid
depending upon the facts and circumstances.
2
•Inter charity donation, i.e. corpus donation by one charitable
organization to another charitable organization shall be treated as
valid application of funds on the part of the donor organization,
and exempt in the hands of the other.
3
•Anonymous donations to the extent that they exceed Rs. 1,00,000
or 5% of total income are not normally subject to 85% application
for charitable purposes, since they are taxable. Hence, they may
be accumulated indefinitely.
Key Elements:

36. INCOME TAX ACT, 1961 – CORPUS FUND & ANONYMOUS DONATIONS
36
SCHEDULE VC:

37. INCOME TAX ACT, 1961 – UTILISATION OF FUNDS
37
1
•Section 11 of the Act requires a trust to utilize at least 85% of its
income for charitable or religious purposes, and the remaining
balance is permitted to be accumulated.
2
•If it is not possible to spend 85% of the income in the same year,
then a trust or institution may make an application to the
Assessing Officer in Form 10 for accumulating its income for future
application to charitable or religious purposes.
3
•Where income could not be spent on account of non receipt of
income, a new Form 9A may be used for income of any previous
year relevant to the assessment year beginning on or after the 1st
day of April, 2016
Fundamentals:
All expenditure of capital nature incurred by a trust or institution shall be added to
the expenditure appearing in the income and expenditure account and the same shall
be thereafter deducted from the gross income of the trust.

38. INCOME TAX ACT, 1961 – COMMERCIAL RECEIPTS
38
1
•Sec 2(15) has significant implications and organizations falling
under the last category should be mindful of not having gross
receipts from trade, commerce or business in excess of 20% of the
total receipts.
2
•Separate books are required to be maintained in respect of
business activities.
3
•Where the organization is engaged in various business activities
then separate books for each of such activities are required to be
maintained.
Preliminary Checklist:

39. GOVERNMENT’S PARTNERSHIP WITH NGOs
Introduction
Procedure to Apply for Grants
Reporting with NGO Darpan
39

40. GOVERNMENT’S PARTNERSHIP WITH NGOs
40
NGO DARPAN:
1
•Get details of existing VOs / NGOs across India
2
•Get details of the schemes of the participating
Ministries/Departments/Government Bodies
3
•Apply on - line for NGO grants and Track status of your
applications for grants

41. GOVERNMENT’S PARTNERSHIP WITH NGOs- PROCEDURE TO APPLY FOR GRANTS
41
NGO DARPAN:
1
•Create your account/sign-up and create your own User ID and
Password.
2
•Select the scheme under which you want to apply for a grant. The
link to your selected scheme will provide you with all the details of
the scheme - format in which you have to apply, documents you
need to attach etc.
3
•You can get the details of the Nodal Officers for the concerned
scheme, from the website. Any queries regarding schemes or
about how to proceed for schemes and grants will be clarified by
the respective Nodal Officers.

42. GOVERNMENT’S PARTNERSHIP WITH NGOs
Government has decided to make PAN Number of VOs/NGOs mandatory along
with Aadhaar & PAN Numbers of their Board members/Office bearers.
42
EXAMPLE:

43. GOVERNMENT’S PARTNERSHIP WITH NGOs
43
Any VO / NGO which is registered as a trust/ society/ a private limited nonprofit
Section 8 Company, can Sign Up on the NGO Darpan. As of now no Individual (person)
Registration is allowed.
EXAMPLE:

44. GOVERNMENT’S PARTNERSHIP WITH NGOs
44
EXAMPLE:

45. DEVELOPMENTS IN THE NGO DOMAIN
FCRA Related Issues
Better Internal Controls
45

46. DEVELOPMENTS IN THE NGO DOMAIN
FCRA Related Issues
Key Mistakes:
 Association must bear in mind that registration/prior permission is sought for the sector that they want
to work in.
 Not more than 50% of the foreign contributions can be utilized for the administrative purposes.
 Amount cannot be transferred from FC designated bank account to domestic bank account. The same
can be treated as mis-utilisation of foreign contribution.
 FC funds should not be transferred to organizations not registered under FCRA without prior
permission.
 There are several other clauses which require permission/intimation, some of them being more than
50% of change in governing body members, change of name of the NGO or change of address.
A lot of Registrations were cancelled on account of Associations not filing their Annual
Return.
46

47. DEVELOPMENTS IN THE NGO DOMAIN
Better Internal Control
 Due to the massive field work involved in the NGO Sector, it is really hard to establish control on the
expense disbursements.
 NGOs have recently started to adopt soft =wares in the which a person uploads the expense
receipts online which are approved /rejected by the manager.
 Once approved an automatic entry is passed in the books of accounts.
 Separate books of accounts are also required to be maintained on the basis of
 FC Funds and Non FC Funds
 Charitable Donations and Commercial Receipts
 Further, it is always suggested to open a separate bank account for separate donors/projects in order
to establish a transparent flow of funds
47
The number of audits being conducted by the donors in their donee organisations
with respect to utilisation of the grant have reportedly increased.

48. Q & A SESSION
4848

49. 4949
Disclaimer: Information presented in this document is considered private & proprietary information (unless otherwise noted) and may not be distributed or copied.
We strongly recommend that you seek professional guidance and opinion before acting in any way on the proposals. While SGA makes every effort to provide
accurate and complete information, various proposals may change subsequently. SGA welcomes suggestions on how to improve our services and correct errors if
any. SGA provides no warranty, expressed or implied, as to the accuracy, reliability or completeness of furnished information.
Presented By : Suhel Goel
FCA, CPA, B.Com (Hons.), D.I.S.A
suhel.goel@sunilgoel.com | +91 98100 09646